Systems, Methods and Devices for Trusted Transactions

ABSTRACT

The invention discloses a system for enhancing trust in transactions, most particularly in remote transactions between a plurality of transactional parties, for instance a seller and buyer(s) of goods and/or services over a public computer network such as the internet. Trust is disclosed to be a multivalent commodity, in that the trust that is to be enhanced relates to information about the subject matter of the transactions (e.g., the suitability of the goods and services sold), the bona fides of the supplier of the goods and services, the appropriateness of a pricing structure for a particular transaction or series of transactions, a quantum of additional transactional value that may be imparted to the transactional relationship, security of information exchange, etc.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of application Ser. No. 14/666,754,filed Mar. 24, 2015, which is a continuation of application Ser. No.13/797,744, filed Mar. 12, 2013, which is a continuation of applicationSer. No. 11/512,701, filed Aug. 29, 2006, issued as U.S. Pat. No.8,538,011, which is a divisional of application Ser. No. 09/731,040,filed Dec. 7, 2000, issued as U.S. Pat. No. 7,159,116, which claims thebenefit of Provisional Application No. 60/169,274, filed Dec. 7, 1999,and U.S. Provisional Application 60/234,199, filed Sep. 20, 2000. Thepreceding identified patents and/or patent applications are herebyincorporated by reference, in their entireties.

This application is related to the following applications: applicationSer. No. 08/674,726, filed Jul. 2, 1996, entitled “Exchange Mechanismsfor Digital Information Packages with Bandwidth Securitization,Multichannel Digital Watermarks, and Key Management”; application Ser.No. 08/999,766, filed Jul. 23, 1997, entitled “Steganographic Method andDevice”, issued as U.S. Pat. No. 7,568,100; application Ser. No.09/046,627, filed Mar. 24, 1998, entitled “Method for Combining TransferFunction with Predetermined Key Creation”, issued as U.S. Pat. No.6,598,162; application Ser. No. 09/053,628, filed Apr. 2, 1998, entitled“Multiple Transform Utilization and Application for Secure DigitalWatermarking”, issued as U.S. Pat. No. 6,205,249; application Ser. No.09/281,279, filed Mar. 30, 1999, entitled “Optimization Methods for theInsertion, Protection, and Detection of Digital Watermarks in DigitalData”, issued as U.S. Pat. No. 6,522,767; Provisional Application No.60/169,274, filed Dec. 7, 1999, entitled “Systems, Methods And DevicesFor Trusted Transactions”; application Ser. No. 09/456,319, filed Dec.8, 1999, entitled “Z-Transform Implementation of Digital Watermarks”,issued as U.S. Pat. No. 6,853,726; application Ser. No. 09/545,589,filed Apr. 7, 2000, entitled “Method and System for DigitalWatermarking”, issued as U.S. Pat. No. 7,007,166; application Ser. No.09/594,719, filed Jun. 16, 2000, entitled “Utilizing Data Reduction inSteganographic and Cryptographic Systems” (which is acontinuation-in-part of International Application No. PCT/US00/06522,filed Mar. 14, 2000, which PCT application claimed priority toProvisional Application No. 60/125,990, filed Mar. 24, 1999);International Application No. PCT/US00/21189, filed Aug. 4, 2000 (whichclaims priority to patent application No. 60/147,134, filed Aug. 4,1999, and to Provisional application No. 60/213,489, filed Jun. 23,2000, both of which are entitled, “A Secure Personal Content Server”),application Ser. No. 09/657,181, filed Sep. 7, 2000, (Attorney DocketNo. 066112.0132), entitled “Method And Device For Monitoring AndAnalyzing Signals”; Provisional Patent Application No. 60/234,199, filedSep. 20, 2000, (Attorney Docket No. 066112.9999), entitled “ImprovedSecurity Based on Subliminal and Supraliminal Channels For DataObjects”; and application Ser. No. 09/671,739, filed Sep. 29, 2000,(Attorney Docket No. 066112.999A), entitled “Method And Device ForMonitoring And Analyzing Signals,” and application Ser. No. 09/731,039(Attorney Docket No. 031838.0008) entitled “System and Method forPermitting Open Access to Data Objects and For Securing Data Within theData Objects,” filed Dec. 7, 2000. The previously identified patentsand/or patent applications are hereby incorporated by reference, intheir entireties.

In addition, this application hereby incorporates by reference, as iffully stated herein, the disclosures of U.S. Pat. No. 5,613,004“Steganographic Method and Device”; U.S. Pat. No. 5,745,569 “Method forStega-Cipher Protection of Computer Code”; U.S. Pat. No. 5,889,868“Optimization Methods for the Insertion, Protection, and Detection ofDigital Watermarks in Digitized Data”; and U.S. Pat. No. 6,078,664,entitled “Z-Transform Implementation of Digital Watermarks.”

BACKGROUND OF THE INVENTION 1. Field of the Invention

This invention relates to the transfer of information between parties;in particular, it relates to systems, methods, and devices for trustedtransactions.

2. Description of the Related Art

Transactions are increasingly characterized by the amount and quality ofinformation available to market participants. Whereas a seller seeksprofit driven arrangements, which may vary over the course of arelationship with a particular buyer or consumer; buyers seeksatisfaction of at least one of the following: price, selection orservice. At any time the buyer or seeker of value-added information maylack recognition of the seller or provider of such information, even ifcoupled with a “manufactured” product or good. Sellers, or providers,similarly lack any information about individual buyers, buying groups oragents, and may only have information regarding potentially profitabletransaction events defined by at least one of the following: existingmarket for goods or services, targeted projected market for new goods orservices, or those consumers or buyers who currently engage intransactions with the provider. Transactions are the result of customerprofiting, a form of recognizable pattern analysis for commerce.

Transactions conducted electronically, often in an online environmenttaking advantage of networks, such as the Internet and/or World Wide Web(“WWW”), form an increasingly-important subset of transactions. Mostobviously, retail sales transactions in which individual customerspurchase goods or services from a central web server using a WWWconnection have become a prominent form of electronic transactions,though such transactions are by no means the only or even necessarilythe predominant category of electronic transactions.

Electronic transactions pose special challenges for transaction parties.Some of these challenges relate to the difficulty of providing to aprospective acquirer (e.g., a purchaser) of goods or services full,accurate, and verifiable information regarding the nature, value,authenticity, and other suitability-related characteristics of theproduct in question. This is true in part, for instance, because thecustomer cannot necessarily handle, sample, or evaluate at first handthe goods or services in question in an online transaction to the sameextent to which he could evaluate them in an in-person transaction. Itmay also be true because of the fear of counterfeit, defective, orotherwise unsuitable products that may be viewed as more easily “passedoff” (assuming a certain non-zero incidence of deceit and/or inadequatesuitability verification among suppliers of products) in an electronictransaction than in an in-person transaction.

Further challenges in online transactions revolve around the seriousconcerns regarding security of such transactions. Such security-relatedconcerns arise from the inherently-vulnerable nature of distributedpublic networks such as the internee, in which transaction partiescannot necessarily determine the path by which data travelling to andfrom them will take. Nor is it always possible to determine the identityof another transaction party, or to ensure that such other transactionparty will take adequate precautions with sensitive data (for instance,data related to the identity or financial details (e.g., credit cardnumber) of the first transaction party) transmitted during the course ofproposing, evaluating, negotiating, executing, or fulfilling atransaction. Thus, concerns are raised about interception, inadequatesafeguarding, or other unauthorized or inappropriate use of datagenerated or transmitted between transaction parties. Such concerns haveraised the perceived need for security technologies adaptable for onlinetransactions. Generically, these technologies have included encryption,scrambling, digital watermarking, and like methods of protectingtransaction-related data.

Two conventional techniques for providing confidentiality and/orauthentication currently in use involve reciprocal and non-reciprocalencrypting. Both systems use non-secret algorithms to provide encryptionand decryption, and keys that are used by the algorithm.

In reciprocal algorithm systems, such as DES, the same key and algorithmis used to encrypt and decrypt a message. To assure confidentiality andauthenticity, the key is preferably known only to the sending andreceiving computers, and were traditionally provided to the systems by“secure” communication, such as courier.

In non-reciprocal systems, such as those described in U.S. Pat. No.4,218,582, a first party to a communication generates a numericalsequence and uses that sequence to generate non-reciprocal and differentencrypting and decrypting keys. The encrypting key is then transferredto a second party in a non-secure communication. The second party usesthe encrypting key (called a public key because it is no longer secure)to encrypt a message that can only be de-crypted by the decrypting keyretained by the first party. The key generation algorithm is arrangedsuch that the decrypting key cannot be derived from the publicencrypting key. Similar methods are known for using non-reciprocal keysfor authentication of a transmission. In the present invention, thenon-secure “public” key is used to a message that has been encryptedusing a secure “private” key known only to the originating party. Inthis method the receiving party has assurance that the origination ofthe message is the party who has supplied the “public” decrypting key.

SUMMARY OF THE INVENTION

Thus, a need has arisen for a system and method for enhancing trust onthe part of participants in transaction. This may be with respect to allaspects of the transaction as to which trust may be an influentialfactor (or, viewed negatively, in which the lack of trust may be apotential bottleneck prohibiting consummation of the transaction, or ofa more-optimal transaction, or of a series of transactions in amutually-beneficial transactional relationship).

A need has also arisen for trust enhancement for transactions inconnection with sophisticated security, scrambling, and encryptiontechnology, for instance that provided by steganographic encryption,authentication, and security means.

A need has also arisen to provide these technologies in an integratedmethod and system, optimally requiring comparatively little processingresources so as to maximize its usefulness and minimize its cost.

The present invention represents a bridge between mathematicallydeterminable security and analog or human measures of trust. Thesemeasures are typically perceptible or perceptual when evaluatingvalue-added information. Additionally, a higher level of transparencybetween parties is assured, because information flow is recognizable andcontrollable by transacting parties at will.

According to one embodiment of the present invention, a method fortrusted transactions is provided. The method includes the steps of (1)establishing an agreement to exchange digitally-sampled informationbetween a first and a second party; (2) exchanging the digitally-sampledinformation between the first and the second party; and (3) approvingthe digitally-sampled. The digitally-sampled information may be approvedwith an approval element, for example, a predetermined key, apredetermined message, or a predetermined cipher. The step of approvingthe digital information may include authorizing the digital informationwith the approval element, verifying the digital information with theapproval element, or authenticating the digital information with theapproval element. The predetermined cipher may be a steganographiccipher or a cryptographic cipher.

According to another embodiment of the present invention, a method forconducting a trusted transaction between two parties that have agreed totransact is provided. The method includes the steps of (1) establishinga secure transmission channel between the two parties; (2) verifying anidentity of at least one of the parties; (3) determining an amount ofvalue-added information to be exchanged between the parties; (4)verifying the agreement to transact; and (5) transmitting thevalue-added information. The value-added information may includevalue-adding components.

According to another embodiment of the present invention, a method forconducting at least one trusted transaction between two parties isprovided. The method includes the steps of (1) authenticating theparties; (2) agreeing to a security of a transmission channel; (3)exchanging secondary value-added information; (4) determining at leastone term for a primary value-added information exchange; and (5)facilitating payment for the transaction based on the terms.

According to another embodiment of the present invention, a method forconducting a trusted transaction between two parties is provided. Themethod includes the steps of (1) establishing a steganographic cipher;(2) exchanging secondary value-added information between the parties;(3) agreeing to terms for the exchange of primary value-addedinformation; and (4) facilitating payment for the transaction.

According to another embodiment of the present invention, a method forconducting a trusted transaction between parties is provided. The methodincludes the steps of (1) identifying a unique identification for eachof the parties, a unique identification of the transaction, a uniqueidentification of value-added information to be transacted, or a uniqueidentification of a value-adding component; (2) applying asteganographic cipher; and (3) verifying an agreement to transactbetween the parties. Once the parties are identified by the uniqueidentification, transaction identification, or the unique identificationof the value-added information, secondary terms and conditions may beoffered for acceptance. The transaction may take several additionalsteps and may include additional value-adding components to reach alegal agreement.

The agreement may cause a secondary term to be enabled for one of theparties. For example, the agreement may be related to the ability tochoose ownership in the seller instead of some benefit in price, serviceor selection. This ownership may be priced according to traditionaloptions pricing methodologies. Essentially the “discount” in cash valueterms, may be the option price. So if there is a price, selection orservice that can be equated to some cash equivalent amount, that amountcan be used by the buyer as a right, but not obligation to purchaseequity in the seller. Alternatively, the cash equivalent may have adirect equivalence in equity prices.

According to another embodiment of the present invention, a method forbi-directionally exchanging value-added information between parties isprovided. The method includes the steps of (1) associating a pluralityof unique identifiers with the value-added information, the value-addedinformation including a digital watermark, a file header, a fileattachment, and/or a file wrapper; (2) associating each of the partieswith unique identifiers, the unique identifiers including a digitalwatermark, a file header, a file attachment, and/or a file wrapper; and(3) exchanging value-added information between the parties.

According to another embodiment of the present invention, a method forexchanging value-added information between parties is provided. Themethod includes the steps of (1) providing a data transmission means;(2) verifying the parties to the transaction; (3) negotiating a term,such as a price, a service, and/or a selection; and (4) binding the termto the information using a digital watermark, a file header, metadata,and/or a file wrapper. The bound transaction terms may includevalue-added information.

According to another embodiment of the present invention, a method fortrusted transactions is provided. The method includes the steps of (1)receiving data to be processed; (2) determining a structure of the data;(3) determining if the data is authentic; and (4) determining anassociated usage of the data based on the data structure and theauthenticity of the data.

According to another embodiment of the present invention, a method forsecure transaction is provided. The method includes the steps of (1)receiving a request to process a transaction; (2) uniquely identifyingthe source of the request; (3) uniquely identifying at least one term ofthe request; and (4) storing identification information for transactionnegotiation.

According to another embodiment of the present invention, a method forthe facilitation of the exchange of information data between at least afirst party and a second party is provided. The method includes thesteps of (1) receiving a rule governing information data from a firstparty; (2) receiving a request for the information data from a secondparty; (3) matching the predetermined rule with the request; and (4)uniquely identifying the information data and the first and secondparties. The information data may include unstructured data orstructured data.

According to another embodiment of the present invention, a method forthe management of rights is provided. The method includes the steps of(1) receiving information; (2) determining whether the information isstructured information or unstructured information; (3) identifying theinformation with a steganographic cipher; (4) authenticating theinformation with a digital signature or a digital watermark check; and(5) associating the identification and authentication results with apredetermined record, a predetermined rule, or a predetermined function.

According to another embodiment of the present invention, a method forrisk management is provided. The method includes the steps of (1)receiving information; (2) determining whether the information isstructured or unstructured; (3) identifying information with apredetermined ciphered key; (4) authenticating information with adigital signature, a digital watermark check, or a predeterminedciphered key; (5) associating identification and authentication resultswith a predetermined rule; and (6) limiting access based on apredetermined exposure of a decision maker.

According to another embodiment of the present invention, a method forsecurely exchanging information data between parties is provided. Themethod includes the steps of (1) creating a private key; (2) deriving acorresponding public key corresponding to the information data soughtand at least one of (a) verifiable data associated with differentversions of the information data, (b) verifiable data associated with atransmitting device, and (c) verifiable data associated with an identityof the party seeking the information data; (3) establishing a set of onetime signatures relating to the information data; (4) establishing ahierarchy of access to the set of one time signatures; (5) creating apublic key signature, the public key signature being verifiable with thepublic key, including the hierarchy of access to the set of one timesignatures; (6) providing the information to a certification authorityfor verification; and (7) verifying the one time signature and thehierarchy of access to enable transfer of predetermined data.

According to another embodiment of the present invention, a method forauthenticating an exchange of a plurality of sets of information databetween parties is provided. The method includes the steps of (1)creating a plurality of hierarchical classes based on a perceptualquality of the information data; (2) assigning each set of informationdata to a corresponding hierarchical class; (3) defining access to eachhierarchical classes and to each set of information data based on atleast one recognizable feature of the information data to be exchanged;(4) predetermining access to the sets of information data byperceptually-based quality determinations; (5) establishing at least oneconnection between the exchanging parties; (6) perceptually recognizingat least one of the sets of information data dependent on user providedvalue-added information data; and (7) enabling a trusted transactionbased on verification, and associated access, governing at least one ofa set of information data sets.

According to another embodiment of the present invention, a method forauthenticating the exchange of perceptual information data betweenparties over a networked system is provided. The method includes thesteps of (1) creating a plurality of hierarchical classes based on aperceptual quality of the information data; (2) assigning each set ofinformation data to a corresponding hierarchical class; (3) definingaccess to each hierarchical classes and to each set of information databased on at least one recognizable feature of the information data to beexchanged; (4) perceptually recognizing at least one of the sets ofinformation data dependent on user provided value-added informationdata; (5) enabling a trusted transaction of the information data basedon verification of means of payment, and associated access, governing atleast one copy of the information data sought; (6) associating thetransaction event with the information data prior to transmission of theinformation data; and (7) transmitting and confirming delivery of theinformation data According to another embodiment of the presentinvention, a device for conducting a trusted transaction between partieswho have agreed to transact is provided. The device includes means foruniquely identifying unique identification information, such as a uniqueidentification of one of the parties, a unique identification of thetransaction, a unique identification of value-added information to betransacted, or a unique identification of a value-adding component; asteganographic cipher; and a means for verifying an agreement totransact between the parties.

According to another embodiment of the present invention, a device forconducting a trusted transaction between parties who have agreed totransact is provided. The device includes means for uniquely identifyingunique identification information such as a unique identification of oneof the parties, a unique identification of the transaction, a uniqueidentification of value-added information to be transacted, or a uniqueidentification of a value-adding component; and means for enabling asubsequent mutually agreed to at least one term.

According to another embodiment of the present invention, a device forconducting trusted transactions between parties us provided. The deviceincludes a steganographic cipher; a controller for receiving input dataor outputting output data; and an input/output connection. The devicemay have a unique identification code.

According to another embodiment of the present invention, a trustedtransaction device for transmitting authentic value-added informationdata between parties is provided. The device includes a display; aunique identifier; means for ciphering information that is input andoutput; means for interacting with other similarly functional devices;and means for storing or retrieving value-added information and avalue-adding component.

According to another embodiment of the present invention, a device forsecurely exchanging information data is provided. The device includesmeans for creating a private key by the party seeking information; meansfor deriving a corresponding public key based on the predetermined dataand verifiable data associated with different versions of theinformation, verifiable data associated with a transmitting device, orverifiable data associated with the identity of the party seekinginformation; means for creating a set of one-time signatures relating tothe predetermined data; means for validating a predetermined hierarchyof access of the set of one-time signatures; means for creating a publickey signature, verifiable with the public key, including the accesshierarchy of one time signatures; means for securely transactingpredetermined data by providing information relating to a proposedtransaction; and means for verifying the one time signature and thehierarchy of access to enable transfer of predetermined data.

According to one embodiment of the present invention, a system for thesecure exchange of predetermined, verifiable information data betweenparties is provided. The system includes at least one condition for theuse of the information; means for differentiating between predeterminedinformation and other seemingly identical information based on anauthentication protocol; means for associating authenticity ofverifiable information data with at least one condition for use; astorage unit for storing the predetermined, verifiable information; andmeans for communicating with the predetermined, verifiable informationstorage.

According to one embodiment of the present invention, a system for theexchange of information is provided. The system includes at least onesender; at least a receiver; a verifiable message; and a verification ofthe message by at least one of the senders and the receivers. Averification of the message may enable a decision over receivingadditional related information.

According to one embodiment of the present invention, a system forcomputer based decision protocol is provided. The system includes ameans for identifying between structured and unstructured information; ameans for authenticating structured information; and a means forenabling a decision rule based on the identity and authenticity of theinformation.

According to one embodiment of the present invention, a system forcomputer-based decision protocol is provided. The system includes meansfor identifying between structured and unstructured information; meansfor identifying structured information; and means for enabling apredetermined decision rule based on the identity of the information.

BRIEF DESCRIPTION OF THE DRAWINGS

For a more complete understanding of the present invention, the objectsand advantages thereof, reference is now made to the followingdescriptions taken in connection with the accompanying drawings inwhich:

FIG. 1 is a block diagram of a system for trusted transactions accordingto one embodiment of the present invention;

FIG. 2 is a schematic of a local content server environment according toone embodiment of the present invention;

FIG. 3 is a flowchart depicting an example of an authenticationaccording to one embodiment of the present invention;

FIG. 4 is a flowchart depicting an example of content flow according toone embodiment of the present invention;

FIG. 5 is a flowchart depicting an example of content flow according toone embodiment of the present invention;

FIG. 6 is a flowchart depicting an example of content flow according toone embodiment of the present invention;

FIG. 7 is a flowchart depicting an example of content flow according toone embodiment of the present invention;

FIG. 8 is a flowchart depicting an example of content flow according toone embodiment of the present invention;

FIG. 9 is a flowchart of a method for trusted transactions according toone embodiment of the present invention;

FIG. 10 depicts a device for trusted transactions according to oneembodiment of the present invention.

FIG. 11 is a block diagram of a person information device according toone embodiment of the present invention;

FIG. 12 is a block diagram of an authentication device according to oneembodiment of the present invention; and

FIG. 13 is a flowchart depicting an authentication process according toone embodiment of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

In order to assist in the understanding of the present invention, thefollowing definitions are provided and are intended to supplement theordinary and customary meaning of the terms:

Authentication: A receiver of a “message” (embedded or otherwise withinthe value-added information) preferably is able to ascertain the originof the message (or by effects, the origin of the carrier within whichthe message is stored). An intruder preferably cannot successfullyrepresent someone else. Additional functionality, such as messageauthentication codes, may be incorporated (a one-way hash function witha secret key) to ensure limited verification or subsequent processing ofvalue-added data.

Authorization: A term which is used broadly to cover the acts ofconveying official sanction, permitting access or granting legal powerto an entity.

Encryption: Encryption is a method of securitizing data. For example,encryption may be data scrambling using keys. For value-added orinformation rich data with content characteristics, encryption istypically slow or inefficient because content file sizes tend to hegenerally large. Encrypted data is sometimes referred to as“ciphertext.”

High Quality: A transfer path into the LCS Domain that allows digitalcontent of any quality level to pass unaltered. “High Quality” can alsomean unfettered access to all VACs.

Local Content Server (LCS): A device or software application that cansecurely store a collection of value-added digital information, such asentertainment media. The LCS has a unique ID.

LCS Domain: A secure medium or area where digital content can be stored,with an accompanying rule system for transfer into and out of itself.

Low Quality: A transfer path into the LCS Domain that degrades the di tocontent to a sub-reference level. In an audio implementation, this mightbe defined as below CD Quality. Low Quality can also mean no VACs areallowed in to the system.

One way hash function: One-way hash functions are known in the art. Ahash function is a function which converts an input into an output,which is usually a fixed-sized output. For example, a simple hashfunction may be a function which accepts a digital stream of bytes andreturns a byte consisting of the XOR function of all of the bytes in thedigital stream of input data Roughly speaking, the hash function may beused to generate a “fingerprint” for the input data. The hash functionneed not be chosen based on the characteristics of the input. Moreover,the output produced by the hash function (i.e., the “hash”) need not besecret, because in most instances it is not computationally feasible toreconstruct the input which yielded the hash. This is especially truefor a “one-way” hash function—one that can be used to generate a hashvalue for a given input string, but which hash cannot be used (at least,not without great effort) to create an input string that could generatethe same hash value.

Read-Only Media: A mass storage device that can only be written once(e.g., CD-ROM, CD-R, DVD, DVD-R, etc.) Note: pre-recorded music, video,game software, or images, etc. are all “read only” media.

Re-writable Media: An mass storage device that can be rewritten (e.g.,hard drive, CD-RW, Zip cartridge, M-O drive, etc.).

Satellite Unit: portable medium or device that can accept secure digitalcontent from a LCS through a physical, local connection and that caneither play or make playable the digital content. The satellite unit mayhave other functionality as it relates to manipulating the content, suchas recording. The satellite unit has a Unique ID.

Scrambling: For digitally-sampled data, scrambling refers tomanipulations of the data. Value-added or information rich data may bemanipulated at the inherent granularity of the file format, essentiallythrough the use of a transfer function. The manipulations are associatedwith a key, which may be made cryptographically secure or broken intokey pairs. The manipulation may be associated with a predetermined key,which may be made cryptographically secure or made into asymmetric keypairs. Scrambling is efficient for larger media files and can be used toprovide content in less than commercially viable or referenced qualitylevels. Scrambling is not as secure as encryption for theseapplications, but provides more fitting manipulation of media richcontent in the context of secured distribution. Scrambled data is alsocalled “ciphertext” for the purposes of this invention.

Encryption generally acts on the data as a whole, whereas scrambling isapplied often to a particular subset of the data concerned with thegranularity of the data, for instance the file formatting. The result isthat a smaller amount of data is “encoded” or “processed” versus strictencryption, where all of the data is “encoded” or “processed.” By way ofexample, a cable TV signal can be scrambled by altering the signal whichprovides for horizontal and vertical tracking, which would alter only asubset of the data, but not all of the data-which is why the audiosignal is often untouched. Encryption, however, generally alters thedata such that no recognizable signal would be perceptually appreciated.Further, the scrambled data can be compared with the unscrambled data toyield the scrambling key. The difference with encryption is that theciphertext is not completely random, that is, the scrambled data isstill perceptible albeit in a lessened quality. Unlike watermarking,which maps a change to the data set, scrambling is a transfer functionwhich does not alter or modify the data set.

Secure Electronic Content Distributor (SECD): An entity that canvalidate a transaction with a LCS, process a payment, and deliverdigital content securely to a LCS. This may be referred to as a“certification authority.” SECDs may have differing arrangements withconsumers and providers of value-added information or other parties thatmay conduct transactions, such as business to business relationships.The level of trust place into an SECD can be dynamically adjusted astransactions warrant or parties agree.

Standard Quality: A transfer path into the LCS Domain that maintains thedigital content at a predetermined reference level or degrades thecontent if it is at a higher quality level. In an audio implementation,this might he defined as Red Book CD Quality. Standard Quality may alsorefer to a particular set of VACs that are allowed into the system.

Unique Identification, or Unique ID: A Unique ID is created for aparticular transaction and is unique to that transaction (roughlyanalogous to a human fingerprint). One way to generate a Unique ID iswith a one-way hash function. Another way is by incorporating the hashresult with a message into a signing algorithm will create a signaturescheme. For example, the hash result may be concatenated to thedigitized, value-added information which is the subject of atransaction. Additional uniqueness may be observed in a hardware deviceso as to differentiate that device, which may be used in a plurality oftransactions, from other similar devices.

Value-Adding Component (VAC): An attachment to the content that enhancesthe user's experience of the content. VACs may be metadata, headers,usage rules, etc. For music, some examples are: album art, lyrics,promotional material, specialized playback instructions. For otherembodiments, the value-adding component may relate to the consumer'spersonal information, preferences, payment options, membership, orexpectations over a transaction.

The agglomeration of value-adding components is “value-addedinformation.” In the aggregate, value creation on an informational levelcan be observed and measured.

Value-added Information: Value-added information is generallydifferentiated from non-commoditized information in terms of itsmarketability or demand, which can vary, obviously, from each marketthat is created for the information. By way of example, information inthe abstract has no value until a market is created for the information(i.e., the information becomes a commodity). The same information can bepackaged in many different forms, each of which may have differentvalues. Because information is easily digitized, one way to package the“same” information differently is by different levels of fidelity anddiscreteness. Value is typically bounded by context and consideration.

Verification: Called “integrity,” in cryptography, an intruderpreferably cannot substitute false messages for legitimate ones; thereceiver of the message (embedded or otherwise within the value-addedinformation) preferably is assured that the message (or by effects, theorigin of the carrier within which the message is stored) that themessage was not modified or altered in transit.

Note: The above definitions may be interchanged in different embodimentsof the present invention and serve as parameters in breaking downvalue-added information exchange and trusted transactions.

Embodiments of the present invention and their technical advantages maybe better understood by referring to FIGS. 1 through 13, like numeralsreferring to like and corresponding parts of the various drawings.

Increasingly, a premium is being placed on both recognition and trust.These intangible elements are both expensive to create and to maintaingiven the ever-decreasing amount of human contact during transactions.To the extent that many transactions are now possible without any humancontact, the present invention is a unique improvement over the art inenabling bi-directional authentication of information between parties toenable “trusted transactions” between those parties.

For anonymous market exchanges, transparency and data integrity, as wellas confidence, serve to promote confidence and growth in product, goodsand service offerings. Perception is an expensive trigger to trustedtransactions reinforced by the experience of market participants.

Confidence as well as experience enable trust: in an anonymousmarketplace, it is desirable for the authenticity of value-addedinformation and value-added components to be made more transparent andindependently verifiable by all concerned parties. Transparency isvalued in education and experience.

A purchase decision between a buyer and a seller is equivalent to thetemporal establishment of a mutually agreed “abstraction of value” inthe information sought or exchanged, which may be represented in bothtangible and intangible forms. Perception is the natural limit of “fairpricing,” and drives value determination of a particular good orservice. Perception may be structured by context, history, and/orcondition. The “value” of a particular transaction has an intrinsicmeaning (financial, economic, legal, political, social, statistical oractuarial meaning), temporally (at the instant of the transaction), forboth the buyer and seller (reached an agreement including offeracceptance and consideration), with any inclusive terms and conditions(hereinafter, “terms”) governing the transaction (price, credit terms,delivery options, and other parameters concerning the good or servicewith respect to which the transaction takes place). As a result of suchtrusted transactions, the parties gain confidence. Even parties who maybe anonymous benefit from the contemplated improvements over the art.

Referring to FIG. 1, a block diagram of a system for trustedtransactions is provided. System 100 includes trusted transaction engine102, which interacts with a plurality of parties 104. Each party 104 hasa unique identity 106.

Value-added information 108, as defined above, includes both intrinsicvalue 112 and nonintrinsic value 114. A vendor (who may be a party 104)may decide what information has value (i.e., should be considered tohave intrinsic value or not), and this decision may be made on a pertransaction basis.

The present invention may provide advantages to all parties involved,including pricing flexibility, a reduction (or optimization) oftransaction costs, a recognition of value-adding components, and theability to provide provable security and trust among parties. Each willbe discussed in greater detail, below.

1. Pricing Flexibility for Parties

Because buyers and sellers have complementary but competitive goals inconsummating a transaction, variable pricing in the present invention issupported without any detrimental affect on the potential relationshipbetween the buyer and the seller, or their agents. Known systems dependprimarily on securing payment; payment alone, however, does not ensurethe buyer and the seller of lasting protection of their respective“intangible assets,” especially those that are increasingly based onvalue-adding information (e.g., trademarks, copyright, patents, credithistory, health condition, etc.). The buyer fears identity theft (“firstparty,” or “sentimental” piracy), while the seller fears piracy ofvaluable information assets (“third party,” or “positional” piracy). Theseparation of authentication of perceptually-represented goods andservices and value-adding information, from payment security, is animportant novel feature of the present invention.

Known systems specify a number of methods for ensuring “security.”However, the primary feature of these approaches is access control basedsolely on proof that a purchase has been completed. This means that if apurchase can be enabled only by determinations that a transaction wassuccessful, the ability to entice more transactions or otherwiseincrease the development of maintainable trusted transactions isundermined. Simply, the fact that a purchase was completed does not meanthat a trusted transaction has, in fact, been enabled. No provision forestablishing a trusted relationship between the buyer and the sellertakes place absent some authenticable exchange of additionalvalue-adding information. The present invention increases the likelihoodof a successful trusted transaction and extends beyond the ability topay (assuming no “identity theft” has occurred). The present inventionprovides additional means for verifiable information exchange thatenhance the experience of the buyer and the seller in seeking trustedtransactions.

Because many manufactured goods are likely to have similar costs from astrict manufacturing standpoint, the value-added service, or services,that are provided to the buyer are likely to encourage additionalopportunities for trusted transaction. The seller can benefit byleveraging a single purchase into a profitable relationship. Evendistribution costs may be commoditized for all similar tangible goods. Aseries of non-contiguous or non-temporal transactions alone wouldconstitute a profitable relationship if the buyer is satisfied and theseller is profiting. That pricing, and its terms, may be varieddynamically or supported flexibly (based on information exchange at thetime or leading to a transaction), is another improvement over the art.The incorporation of micropayments becomes more feasible as the cost oftrust has been reduced and thus smaller discrete increments of monetaryconsideration are easier to support to the benefit of buyers and sellersseeking higher granularity or discreteness over the information ortangible goods they transact. Simply put, identification andauthentication of specific information and value-added components isinherently important to further segmentation of units of payment (e.g.,micropayments). Micropayments may be interpreted as a value-addedcomponent in facilitating transactions.

Pricing may also be bi-directional and asymmetric, and is preferablydetermined by the seller in order to define “profitability.” Somesellers may choose to maintain fixed pricing for their goods orservices, but may incorporate variable pricing in the value-addedcomponent. For instance, while the price of a given good or service maybe fixed, the value-added component may be the terms of the pricing asit effects the buyer. The seller may also entice the buyer to providedemographic value-added components, or related data, which hasintrinsic, sentimental value to the buyer. To the seller, the pattern,or structure, of demographic datum serves as a valuable filter in whichto position its offerings. Simply put, while barter is relativelyinefficient, cash, being anonymous, may not reveal enough information toprovide an incentive for the seller to vary credit terms or offer agreater variety of goods and services, even if there is a singleunderlying value-added information good (the seller can still offerperceptually similar but nonequivalent versions of the informationwithout threatening secure, higher quality, limited, or more expensiveversions).

The ability to offer both secure and unsecure, or legacy, versions ofthe same information based on a mutual disclosure and mutualunderstanding of both the buyer and the seller is particularly novel inthe art. Moreover, privacy can be enhanced and new, unproven and yetunsecure information can be offered without jeopardizing the security ofany pre-existing primary value-added information whether it be music,images, currency, electronic documents, chip designs, source code,legacy versions, prior art, etc.

The period of payment, like the discreteness of the actual payment,interest rate relating to a payment period, grace periods, early paymentbenefits, variable interest rate based on the seller's ability to assessthe credit risk/worthiness of the buyer or its agent, etc. is an elementor component (a value-added component) that may be changed to affect atransaction. Making these components more transparent to buyers improvesthe opportunity for enhancing and maintaining trust. It also enablesbuyers and sellers to make mutually beneficial decisions based ontransparent, verifiable information or value-added components. Moreover,buyer-driven pricing, as with Dutch auctions, or market-based pricing,are not possible without compromising the access-based security in knownsystems. With the present invention, goods and services are better ableto realize fall market value because access to the good or service isnot restricted (such as with new music or new endeavors by “unknown” or“unrecognized” artists, designers, creators or engineers). The marketparticipants are better able to assess the good or service in question,and/or the related value-adding information/component, when experienceand information sharing is encouraged. The prior art is restrictive bynecessity in information sharing precisely because security cannot bemaintained by prior art systems with such open access to information.

For goods or services that are difficult to value (e.g., media content,legal advice, design, non-commodity items, etc.) and decision-intensive,pricing becomes a barrier to entry in a marketplace that puts a premiumon recognition. Highly recognized artists, lawyers, designers,retailers, etc. have a competitive advantage over their unrecognizedcompetitors. One approach to gaining recognition is freely distributingor providing goods or services. Ultimately, the seller still needs toprofit from this initial positioning to the extent that financing ofoperations is available (the seller can stay in business as long asinvestors or financing is available to enable such operations). The samegoods or services may be offered in a “tiered” manner, which relates tothe purchase price or to the quality of the underlying good or serviceto be exchanged. Examples of this include providing music in MP3 qualityaudio instead of CD quality; providing 10 hours of customer supportinstead of charging per hour; charging service charges instead of freechecking or ATM access; charging a price per bit or bandwidth; etc.

Segmenting also plays a role in the “freshness” or “newness” of theinformation good or service. Live concerts or lectures may be worth moreto the buyer than pre-recorded versions offered later or separately. Theperformer or creator of the information to be performed, or conveyedlive, can only be at one place at a time, and may be a premium for thattime. Live broadcasts may similarly have a higher value. Physical advicemay be worth more than printed literature to the buyer as well. Thesedynamics create an impetus for flexible and dynamic pricing that doesnot undercut the security of the overall “trusted transaction” methodsand systems envisioned in the present invention.

In known systems, legacy information, relationships, etc. systemicallyundermine the ability to ensure a “trusted system.” The buyer and theseller in the art have no means for differentiating between the secureand unsecure versions of a good, service, or value-adding component. Thepresent invention provides such protocols by incorporating additionalbits of data, which do not necessarily represent added data, butimperceptibly replace data with identifying or authenticating data,enabling market participants to determine whether a value-addedinformation “package” is secure. This also enables uniqueness ofinformation packages to be consistently created and checked ormaintained for later reference. The prior art relies on the denial ofaccess or access restriction, a clear disadvantage in increasing theavailability of value-added information. With trusted transactionsmarket participants are able to verify, identify, and price informationand then decide which versions are appropriate for a given or existingdemand.

Pricing may be better understood if the cost or time of computation ismeasured as a tangible asset. Similarly, the natural limit to theft oftangible assets has always been in the cost of the tangible assets. Asinformation can increasingly be traded for value in excess of the costof its storage or transmission, pricing becomes less tangible and moresubjective. Delivery of information accurately and quickly becomes avalued service. Measuring such value is based on the same principlesthat allow cost estimates of the delivery of fixed weight parcelpackages. The existence of hackers indicates a lowered economic barrierto entry for informational crime, including identity theft and piracy.Dissemination of binary code, which is similarly detrimental, at littleor no cost to the originator of the valuable information, introducesnovel concepts to the approaches of information pricing. Tangible goodsbecome substitutes for cash payment.

An example of pricing based on effort is illustrated by a watchmaker whotakes six months to finish a watch that he prices at $70,000. Thisincludes a “reasonable” profit and the cost of materials. The buyer is awatch fanatic and earns $140,000 a year. The exchange of a tangible goodthat has intrinsic value, which is converted into monetary terms fornegotiation, as agreed by the parties in the exchange, becomes moreprominent if information concerning value is transparent or fluid forall market participants. Transparency is inherently favored by marketsseeking to appropriately price goods or services based on all availableinformation at the moment of pricing. Conversely, risk can be pricedbased on the financial context or structure of an organization. Thosewho earn $20,000 should have to have confirmation by others withadditional financial or fiduciary responsibilities before validating orapproving transactions that exceed an individual's earnings for theperiod in question. At any time responsibility can be linked toauthority, as a pricing mechanism for decisions concerning similaramounts of monetary consideration. With pricing mechanisms and userules, trusted transactions offer flexible pricing not possible withcurrent systems.

Value-adding components, which may include pricing, is preferably viewedas a separate and distinct means for the buyer and the seller toseparate information that may or may not be essential to any giventransaction and may also be viewed as nonessential unless both partiescan stipulate such information exchange. This is invaluable as multiplechannel distribution of the “same” goods (e.g., download music over theInternet versus purchasing a CD from a store) or services (obtaining amortgage online versus processing physical loan documents) can beoffered by the seller. Determinations of which channel, or channels, areprofitable requires verification of unsecure and secure versions ofthese “same” goods.

Value-adding components may also include an offer, an acceptance, a bid,a purchase, and a sale of a securities instrument, including an option,a warrant, or equity.

Security is inherently intended for the party seeking value orauthentication over the information or transaction and converselyprotecting sentimental information or identity from being stolen ordefrauded. For the long term, buyers are able to differentiate thatpersonal information value-added components are appropriate fordissemination to a seller to affect a transaction, or to get betterterms. Either the buyer or the seller, or both, are better able todetermine that transactions or relationships are favorable on atransaction to transaction basis, and thus “transact” accordingly.

Pricing of the value-added information may include a value-addingcomponent relating to the present value of recognition/non-cashequivalent cost/service that is handled in a separate negotiation ortransaction, or a subsequent negotiation or transaction.

The present invention may include limits of liability, or may considerthe time value of money when determining a limit of liability threshold.The present invention may enable rules/access/authorization based on theresult of that operation. In one embodiment, an actuarial estimate ofliability (future time) or cost (present time) may serve as a rule forenabling another rule.

2. Reduction or Optimization of Transaction Costs

In instances where the buyer and the seller, or their agents, seek totransact products or services that include value-added information, theseller generally seeks to maximize profit, but may forego profit in theshort term to ensure recognition or market share in the short term. Thebuyer seeks “satisfaction,” which is dependent on one or more of thefollowing product/service determinants: 1) price; 2) service; and 3)selection. These determinants may be quantitatively or qualitativelyassessed and may be based on available bandwidth, time of transaction,and transaction event conditions.

A priori, the buyer may not recognize the seller. In an informationeconomy, such events are not a disincentive to pursuing a trustedtransaction, but instead present market opportunities for valuing,authenticating, and verifying information (all may be value-addedcomponents) concerning potential transactions are inefficient.Conversely, the seller may not have enough information about the buyerto determine what type of potential transaction can be enabled, based onthe buyer's ability to purchase now, or at any point in the future. Theseller may be inclined to make a sale with the buyer (or the buyer'sagents) with or without confidence that the initial transaction willlead to further transactions or trusted relationships that areprofitable for the seller. The seller may use purchasing options (e.g.,barter, cash or its equivalent, or credit) to enable a purchase by thebuyer. According to one embodiment of the present invention, becausevalue-adding information and its components may be bidirectional, boththe buyer and the seller may chose to negotiate the transaction,including variable terms for payment, as one form of value-addedcomponent or service and support for the information to be transacted.

Transactions, as defined by a purchase event (payment can bepreliminarily assure), may happen before or after the buyer and theseller have “agreed” to transact. When the seller requires value-addingcomponents/information about the buyer before entering the transaction,the seller generally has higher risks than the buyer, which may affectits profitability. Where there is a high risk for piracy, such as thedigital copy problem (that can render individual copies of value-addedinformation worthless), the seller may not be able to establish trustwith an unknown buyer. The seller is not assured of any potentialprofitable transactions or long-term relationship with the buyer, whichposes a significant risk to the seller if the buyer pirates informationgoods or services. A lack of dynamic authentication, even in real time,at least initially, and adjusted as needs arise over time, andflexibility in negotiable terms, may cause the seller's assets to beeconomically undervalued.

Conversely, in those events where the buyer requires value-addingcomponents/information about the seller in advance of entering atransaction, the buyer generally has higher risks than the seller withregard to its ability to enter into transactions. “Identity theft” is anexample of a risk that is higher for the buyer than the seller in thesetypes of transactions. Additional transactions include on-linebrokering, auctions, searches, bots, webcrawlers, recognition, anddetermination of goods or services absent proof of privacy guarantees.This applies to noncommercial information as well (e.g. the FDIC logo,currency, driver's license, etc.) The establishment of mutual trust maybe asymmetric depending on the risk profile of the buyer and the seller.Risk/reward tradeoffs are implicit to some transactions, while the timerequired to establish a trusted transaction or eventual profitablerelationship may not be contiguous. In many on-line transactions, theper transaction risk is generally higher to the buyer, who may sufferfraud and may need to be more diligent about what value-addinginformation it chooses to exchange in the interests of enabling atrusted transaction. It is true, however, that in business to businesstransactions (“B2B”), or in financial information exchange, the relativerisks to each party are relatively equivalent, and requiring a moresymmetric exchange of value-adding components relating to verificationand purchasing power (in the form of barter, cash, cash equivalents orfinancing that would also constitute value-adding components) is not asnecessary. Reducing the cost of creating and maintaining trust is anadvantage of the present invention over known systems.

3. “Reintermediation”: Recognition as a Value-Added Component

Asymmetry exists in recognition as well. Where word-of-mouth mayconstitute an acceptable means for creating recognition for a particulargood or service, the buyer and the seller may wish to expand theirrespective abilities to capture more of the increasingly available goodsand services, or value-adding information (about themselves, or termsfor a trusted transaction). With advertising and other forms ofmarketing, the push and pull of value-adding information between thebuyer and the seller also contributes to potential purchase decisions byboth parties or their agents. The buyer may control certain criteria itseeks, such as price, selection, and/or service. The seller, conversely,seeks the highest profits from a given potential buyer or his agents,which may not be quantifiable from the first transaction or may not bethe primary focus of the seller (such as seeking a valuable, marquisclient). Both the buyer and seller may compare patterns or structurethat, when recognized, help in forming opinions about the history,condition or context of the information.

In general, recognition serves to encourage more recognition. The sellerwill likely seek trusted transactions in the interests of profitablyleveraging the time, cost and expense of generating the initial exchangeof goods and services with the buyer. Over the longer term (defined asany additional transactions beyond the initial transaction), aprofitable relationship is sought by the seller. The buyer and theseller may still maintain flexibility as expectations or needsconcerning the relationship change. The present invention allows forsuch variability and flexibility by enabling real time adjustments tothe terms that prevail between market participants. While terms areconditions are negotiatiable, security of the overall system is notjeopardized because secure and unsecure versions of the “same”value-added information and value-added components can be adjustedbi-directionally. In an information-based transaction, there is value inreintermediation by sellers seeking to ensure that their information isprovably identifiable and verifiable.

The buyer and the seller may seek recognition or use means forincreasing visibility of their respective interests. The buyerultimately seeks to satisfy itself through a trusted transactionpreserving private or financial information for select transactionsrequiring higher amounts of information exchange or verification (realtime references, “membership reward programs” such as frequent flierairline points, or financing options that can he dynamically offered,are two incentives to the buyer and are likely to differentiate vendors,large and small, really or perceptually); the seller ultimately seeks toprofit from the trusted transaction. Recognition of this potentialexchange between the parties is not assumed to be high enough to enablea transaction, but high enough to create exposure for the buyer or theseller. Trust is assumed to not be pre-existing, or it may be variablebetween the buyer and/or the seller, requiring additional exchanges ofvalue-adding information to enable a trusted transaction. The seller, inthe extreme, seeks the highest profit for each transaction. The buyer,in the extreme, seeks the highest satisfaction for each transaction. Asdiscussed above, both goals are complementary and competitive, therebyincreasing the need for dynamic exchange of value-adding information.Recognition can enhance the potential for a successful trustedtransactions and serves as a form of abstract experience for bothparties to efficiently make decisions. With experience, valueassessments become possible. Abstractions of value become experience astrusted transactions beget more trusted transactions.

4. Provable Security and Trust

Trusted transactions are characterized primarily by bridging the gapbetween “provable security” and the imprecise nature of trust.Encryption, cryptographic containers, digital watermarks and other formsof electronic data security can be mathematically demonstrated—discretealgorithms can be designed to meet certain pre-defined specifications orpre-defined expectations.

Encryption and secure digital watermarking (e.g., steganographicciphering) offer tools for determining data integrity, authenticity andconfidence. Transactions, however, still require human decision-making.Known systems describe a number of approaches for ensuring transactionalsecurity based solely on transmission security and fail to differentiatebetween what could be called “positional piracy” (e.g., the fraud ortheft of universally recognized goods, products, and services) and“sentimental piracy” (e.g., the fraud or theft of personal, private orfinancial information).

For the purposes of this disclosure, the extreme case of sentimentalpiracy is identity theft. So long as information can be represented inbinary digits (Os and is), and can be easily copied, stored ortransferred, identity fraud becomes an increasingly insidious problem.There is a temporal limit whereby the actual person is able to “reclaim”their identity at some point in time. The extreme case of positionalpiracy is zero returns on an intangible asset that has been pirated. Aswell, the present invention offers advantages over known systems forpositional piracy that enable the continuation of legacy business,customer relations and existing information formats, withoutsufficiently weakening any overall system security for trustedtransactions. Simply, unlike known systems, access restriction is not anadequate or appropriate means for ensuring the security of informationdata for a wide variety of applications.

To the extent that “security by obscurity” is typically representativeof weak security to those skilled in the art of cryptography, moretransparency for parties to a transaction over security protocols andinformation transfer are inherently necessary to ensure trustedtransactions. Although information between parties may be asymmetricallyexchanged (i.e., the value-added information or value-adding componentsis not equivalent in quality or quantity between parties, such as adifference in the amount of information exchanged, the identification ofthe parties, etc.), the level and degree of authenticity or verificationonly differs among the goods, products or services to be transacted, aswell as the demands of the market participants. For the purposes of thisdisclosure, the value-added information is the fundamental good to betransacted between parties, while value-added components represent anatomic unit of data that is defined as the least amount of data that caneither add functionality or be perceptibly recognized to a system fortrusted transactions. Data may be represented in analog or binary termsin order to establish uniqueness and assist in identification andauthentication. Value-added components may be added, subtracted, orchanged to vary the underlying value-added information sought.

Because humans have difficulty remembering passwords, personalidentification numbers (PINs), and the like, dependence on such datum isincreasingly problematic as more anonymous transactions are enabledbetween parties over electronic networks, such as the Internet, orbetween businesses in private networks. While passwords, or PINs, arecommonly thought to be secure, the ability to check all combinations ofnumbers or crack passwords becomes less computationally expensive withincreases in both processing speed and availability of bandwidth. Costis reduced to the detriment of security if any individual has the meansfor high order computation or network-based bandwidth in discovering orhacking any given secret. Quantum computing speeds up the ability totest and discover such data at even greater speeds, and presents uniqueproblems to security systems described in the art. Quantum computingalso enables the definition or predetermination of the physicallimitations of communicating or securing information. Where differencebetween binary or digital signal processing and quantum mechanicallimits is higher, better security is enabled.

Biometrics have been suggested to remedy this problem, but do not offerany way to create truly cryptographic secrets to be shared betweenparties. Iris scans, fingerprints, and the like, are easily stolenbecause they are easily perceptible to those seeking to defraud. Oncestored electronically, biometrics be stolen for unauthorized use.Combining a biometric with a digital signature may provide a means toensure that a given representation of a fingerprint or iris is fixed,temporally at the time the certificate is created, but does not preventdedicated attacks at determining the fingerprint or iris to be used atsome subsequent time. Real time authentication and verification areimprovements envisioned with the present invention. Assuring that aparticular fingerprint, signature or iris “data set” is that of theintended user, is fundamentally important to embodiments describedherein. This becomes especially invaluable with increasing number ofanonymous transactions. Although uniqueness may be enhanced with digitalsignatures and digital iris or fingerprint records, the advantage withthe present invention is that more secure forms of uniqueness based on apredetermination of the discreteness of time and a predetermination ofthe limits of information conversion and transfer are absent in the art.

Moreover, real time authentication is not enhanced with systemsdescribed in the art, since such biometric data is easily stored ortransferred, and thus suffers the same pitfalls for any binary data thatis sought by a party seeking to defraud. Biometrics may be great forforensics (e.g., to determine after the fact who is responsible for aparticular act), but they do not effectively address an inherent problemin enabling trusted transactions; that is, real time verification ofparties or real time association of parties with information beingtransacted (in an auction, for instance). They are also notrepresentative of a cryptographic key, which, as is well-known in theart, requires secrecy, randomness, and an ability to update or destroythe cryptographic key.

Another advantage of the present invention is the ability to serializeor individualize “personal secrets” that are shared between parties toboost confidence and transparency of transactions. That control, and theinherent uniqueness of personal entropy, constructed from suchinformation as a hometown, favorite restaurant, or high schoolsweetheart, is a means for perceptible representations of “secret data”that enhances the ease-of-use and application of appropriate sharedsecrets to be exchanged in conducting trusted transactions. Associatingsuch secrets with primary value-added information or value-addedcomponents being transacted is an additional novel feature of thepresent invention. Essentially, the present invention provides theability to personalize or serialize, informationally, an actual“transaction event,” including: the buyer; the seller; primaryinformation; value-added components and tangible assets created,manufactured, or manipulated; and any additional reference that can bemade perceptible and secure to any observer. Bridging cryptographic withreal world perception is a benefit over the prior art.

Essentially, randomness alone, whether pre-determined or not, is notsufficient for the creation of a “secret” that may be used with highlevels of confidence repeatedly in assuring the validity of informationor verify the identity of a party. Encryption systems cipher therandomness according to available data capacity; digital watermarkingciphers the randomness according to perceptible features orcharacteristics of the carrier signal (a humanly-perceptible measure ofdata capacity, which distinguishes applications for encryption fromsecure watermarking). That such information can be made morecomputationally difficult to discover, even by brute force attacks(since such experience is only limited by the experience of individuals)is of particular benefit to the art. The computational complexity addedby use of a steganographic cipher is discussed in the U.S. Pat. No.5,613,004, the disclosure of which is incorporated by reference in itsentirety, and offers a means for human observers to see the actualtampering of information represented perceptibly. This proof isself-similar to that which is obvious in the real world, i.e., the easeat which one can observe that a watermark is missing from currency.Handling information as contemplated by the present invention fortrusted transactions is unique in bridging computational benefits fromboth digital signal processing and cryptography to the benefits of allparties to a transaction. The present invention is the enhancement oftransactions through bidirectional verification of parties andverification of primary or secondary information exchanged.

An additional advantage of the present invention is the ability tocontinue to offer legacy business relationships, legacy products, legacyservices and other means that will not reduce the overall securitymaintained by a system for trusted transactions. Known applications lackthis feature, and instead rely on denial of access or authorized accessto information. Information need not be restricted, and is preferablyfreely exchanged to widen the opportunities for transactions with agreater potential number of parties. The present invention is animprovement, in that the elements necessary for generating trustedtransactions may be made more flexible, and those elements that are“secret,” those elements that will be available at predetermined times,as well as those elements that are made more obscure to unintendedparties, increase the overall computational difficulties in defeating asystem for trusted transactions.

An additional consequence is improvements in enterprise resourceplanning and data mining. To the extent that transactions are madeunique and may be atomized into data, functions, value-added componentsand any associated information, the cost of maintaining or referencingstored data, a goal in data mining technologies, can be made moreefficient and effective in assisting with an optimized appropriation ofresources, individual or corporate. Without such uniqueness,serialization, authentication, verification or identification,particular transaction events cannot be analyzed, manipulated oroptimally used to create additional trusted transaction opportunities.Caching technologies are similarly effected by the present invention.The choice about what information should be maintained locally based onidentification or authentication of that information available on anetwork, such as the World Wide Web, enables higher efficiency insorting and referencing data for repeated use without increased demandson the network.

The ability to serialize individual transactions by particularizingtrusted transaction elements between parties is handled moreconsistently than in known systems. Access is not denied, and rules foraccess are not pre-determined for goods or services that requireexposure, testing or additional information for consummating atransaction. Ease-of-use, maintenance of more human-like and physicalworld expectations of trust are made more transparent. Identity andauthentication risk is reduced, and confidence is increased. Overallexpectations are handled according to the needs of individual parties toany number of transactions. What results from trusted transactions is amore vibrant and competitive marketplace for information, value-added ornot. Anonymity and legacy relationships may be maintained, unlikerequirements in known systems.

The application of steganographic ciphers enables an “optimizedenvelope” for securely inserting, detecting, and protectinginformational signals, or data, or digital watermarks (predeterminedmessages) in a given digitized sample stream (e.g., a predeterminedcarrier signal, such as audio, video, image, multimedia, virtualreality, etc.). As the perceptible qualities of the content stream havea basis as analog waveforms, steganographic ciphering increases thecomputational difficulty of crypto-analysis and makes unauthorizedremoval or tampering of the watermark a costly operation. Withperceptible damage to a carrier signal a result of such tampering,tampering is more easily observable by parties, including those who areinvolved in a particular transaction event. Moreover, such tamperingenables higher transparency and verification of carrier signals of datumthat are marked for secure exchange, even if over unsecure transmissionchannels. The prior art relies overly on secure transmission channelsWhile ignoring the potential benefits of securing datum (with securewatermarking, scrambling, or chaffing, for instance) over any availabletransmission channel. Such tampering is also transparent to vendorshandling or accepting the information that enables less costlyvalidation of claims made after some event must be confirmed andverified to the satisfaction of transacting parties. These uniquefeatures are an improvement over the art.

What differentiates the “digital marketplace” from the physicalmarketplace is the absence of any scheme that establishes rights andresponsibility, or trust, in the authenticity of digitized goods,services or value-added information. For physical products, corporationsand governments watermark “goods” and monitor manufacturing capacity andsales to estimate loss from piracy. Reinforcement mechanisms, includinglegal, electronic, and informational campaigns also exist to bettereducate consumers. Evidentiary levels of confidence must exist tosupport claims that are typically competitive between parties to atransaction.

Currently, security parameters may be coded into the actual physicaltransaction system or instrument. Similar to the security inherent inthe randomness of the magnetic strip on most credit cards, thesesecurity parameters are designed to be tamper-resistant. Cracking suchcodes would not present insurmountable barriers to a dedicated effort atcracking a PIN. Access authorization is easily compromised by fraudulentreconstruction of an instrument, such as a credit card. Although storageof the security parameters in volatile, or nonpermanent, memory appearsto offer advantages, including higher security required for manytransactions, absent this higher level of security, real timeauthentication becomes a crucial benefit to parties in ensuring thevalidity of many forms of transactions. Insurance, identity, andpurchases of expensive items or services are not generally confidentlyhandled. Use of trusted transactions to process value-added informationis unique and beneficial.

Several components may be used for separation of “trusted elements” fora given device or method for ensuring “trust” according to oneembodiment of the present invention. First, a general purpose computingdevice is comprised of a CPU, a memory or storage, input and outputdevices, and a power supply. A device or card holder decides whether andwhen to use the device. For additional benefits described herein,personal information or privacy data may be controlled by the user insample embodiments envisioned, unlike other pre-determinations of datain non-trusted transaction smart cards (e.g., a credit card).

A data owner, who may or may not be the device holder, is provided.Where the device holder and data owner are the same, as contemplated bysome embodiments of the present invention, such data as digitalcertificates, time stamps, Unique IDs of data coming into and out of thedevice (personal or financial information being a large class of suchdata), etc. can be authenticated in a humanly-perceptible manner. Thismay be accomplished by a transducer, or a screen, that can transferanalog-based information of device holder, or be inputted andtransmitted by the device holder for secure watermarking, or hashing ofdata to be exchanged.

A terminal, controlling input and output to and from the device (e.g.,phone cards are controlled by the phone service provider's terminals,ATMs are controlled by financial institutions, set-top boxes controlledor owned by entertainment distribution providers, etc. that may be madephysically secure by separate means) or a system that may interact witha device, such as that contemplated in embodiments herein, to enablereal time authentication or verification where such checks may fail fromtime-to-time with existing pre-defined trust arrangements orpre-determined protocols that require inefficient updating by one orboth parties. In lieu of a physical visit to a vendor, the presentinvention anticipates more convenient anonymous updates, in thosemarkets where it is possible to the benefit of both buyers andseller—both parties have a market demand or need and are able to agreeto such arrangements.

Embodiments of the present invention may include a simple Internetbrowser plug-in, with complementary system software for the provider of“information goods or services,” that would identity, verify,authenticate, enable transfer, enable copying or other manipulations ofthe various primary value-added information and value-added components.Some of the functionality may strictly indicate what, if any, securityexists within a particular primary value-added information set. Thisneed not be settled within a system of trust, but be inherentlyimperceptible to any casual observer or market participant interested inthe information or the transaction events that can be observed.Essentially, encouragement of provable differentiation between differentclasses of primary value-added information (secure, unsecure, legacy,etc.), value-added components (not the primary information butvalue-adding to the transaction event, and any information concerningmarket participants (private, history, condition, or financial) isenabled, using simple steganographic ciphers with mapping and transferfunctions without compromising the underlying security.

A device issuer controls the operation of the device according tomutually agreed to terms between parties. The device issuer may limitthe use or functionality of the device.

For the device hardware manufacturer, fraud may be attempted by thevarious parties, subcontractors, etc, who are involved in themanufacture of the devices. The device issuer requires protocols thatcannot be defeated by typical “rogue engineer” attacks, where securityis dependent on an understanding of the methodologies, device, or systemdesign. In fact, the ability to transparently and provably manufacturesecure smart devices may be accomplished with such protocols as digitaltime stamping (using successive temporally related hashes that seedother hashes to create a universally acceptable means for establishingthe time of manufacturer, with time being the universal constant), ordigital watermarking (where instead of time, other predetermined data isconcatenated with data for provably establishing ownership, over thedevice). Tampering must be provably perceptibly evident upon tamperdetection of the device (as with device used for limiting theft ofclothing or physical items in retail stores). Prevention of the rogueengineer problem is not anticipated by known systems.

A software manufacturer usually requires clear specifications ortransparency such as open source code, providing the underlyingciphering algorithms and other specifications for analysis. Similartrust issues as with device hardware manufacturing exist.Stega-ciphering the operating system, the simple system or engine fordetermining authenticity and identification of available data, toprevent memory capture, cloning, write once memory specific to thedevice holder provide additional benefits of security. A discussion ofsuch is provided in U.S. Pat. No. 5,745,569, the disclosure of which isincorporated by reference in its entirety. As well, using transferfunctions with associated predetermined keys is also a means foraccomplishing confidence and authenticity in transaction. This isdescribed in U.S. patent application Ser. No. 09/046,627, entitled“Method for Combining Transfer Functions with Predetermined KeyCreation,” the disclosure of which is incorporated by reference in itsentirety.

In general, security requires: fewer splits of trust (poor tyingarrangements that may encourage fraud or piracy), better transparency ofdata (it should be perceptibly apparent, or mathematically, oractuarially possible to observe risks and quantify them to enablesecurity design with a clear understanding of potential threats for eachsystem, method or device), and use of cryptographically strongprotocols, where security is both provable and perceptible such thatmarket-driven features are both fundamental at the earliest developmentand design of appropriate systems and devices, in order to buildconfidence and trust that is acceptable and transparent to all partiesto a transaction.

Application of a steganographic cipher to the operating system oroperation of the contemplated systems and devices ensures furthersecurity from tampering. Such methods are disclosed in U.S. Pat. No.5,745,569, and offer additional benefits when coupled with theembodiments disclosed herein. System or device operations may becontrolled with minimum functionality, objects or executable code. Asvalue-added information is checked for authenticity, decoding anyembedded operation objects or code, executing the operation of thesystem, and deleting the object or code from memory, or randomizing itin memory to avoid capture, would greatly increase the security of bothvalue-added information and the systems or devices intended formanipulation of the value-added information. Alternatively, certain basefunctions, such as play, record, copy, manipulate, and transfer data,may be problematic. These functions may be atomized into objects thatmust be first authenticated by the trusted transaction device beforethey are operable for the given format, or before they provideadditional information.

Time of use has traditionally been a typical constraint for securingsmart cards and similar devices, but may become ineffective andinconvenient to users. Enabling a smart card to capture or transduceinformation (even converting analog information or input into securedigitally-sampled representations of the analog information for analysisand authorization, as with a stega-ciphered digital watermark) about thetime, location, identity or any number of specific datum greatlyenhances smart card and similar device security, trust and confidence.Such benefits over known systems are valuable contemplated with thepresent invention,

Valuations of trust also enables the described sample embodiment of atrusted transaction system or device to compare private information withfinancial information, essentially bridging determinations of risk infinancial transactions and insurability. Private, or sentimental,information disclosure is more highly sought in determining insurancerisk. The ability to pay, and other financial information, are beingcommoditized. Insofar as the described method and device for suchdeployment of trusted transaction technology can be assessed fordifferent products and markets, the example of an insurance device couldeasily be called a trusted transaction privacy/financial informationdevice or card. Users can control what information they disclose giventhe risk coverage or credit they seek, and providers being able todecide, with more current and transparent information disclosurepossible, what to underwrite or what to finance.

For the authentication or identification device, there is a risk ofidentity theft to both buyers and sellers, or information that islimited by law. Examples include Medicare-covered drugs, local legalconstraints, etc. Risk may be predetermined or limited by a governmentagency (FDIC, FBI, Social Security, IRS, DMV, Federal Reserve, etc.), asimilarly outfitted organization (trust is held in perceived andobservable representations of the organization, food stamps, stamps), oran equivalent transaction event enabler (traveler's check provider,medication, etc.). In these cases, systemic risk is limited byenforcement agencies held in trust by a government or body politic. Therestrictions are predetermined and dependent on successfulauthentication or identification of a product, label, or other similaritem. Laws may differ between localities and may be dependent on someform of identification, proof of age, or proof of residency. To properlyserve local residents becomes a data security issue. This embodimentoffers advantages over the art in its flexibility and real time,perceptible authentication properties.

Both the provider and the agency involved may have higher levels ofrisk, because the nature of the information is characterized by highvalue, general or universal recognizability, and a genuine threat offraud. Most people casually accept that $10 and $20 bills are real evenif they prove not to be later. Governments try to limit such liabilitywithout damaging the overall trust in the currency. As abstractions ofvalue are exchanged, a smart identifying device, instead of valuereplacement device (predetermined, fixed spending or authorization in adevice), is necessary to capture “personal entropy,” or informationabout oneself that can be more closely guarded and less open to theftversus a password or pass phrase. Secrets must differ fromidentification. The larger body of data to search to discover thesesecrets act as a higher form of secrecy. These datum may be converted toreadable text in some embodiments or maintained in digitally-sampled buthumanly perceptible form in other embodiments (favorite restaurant isrepresented as an actual image of the restaurant, mother's maiden nameis actually the voice of an individual's maternal grandparents, highlyspecialized forms of personal information that may be dynamicallychanged or checked quickly and conveniently without undue risk exposureto the system).

For governments and individuals, piracy of identity is the mostinsidious risk exposure. Identity theft may be curtailed with devicesthat can transduce, in real time, an iris scan, fingerprint or otherbiometric and compare securely transmitted results with a secured storedrecord at the time of initialization. Alternatively, this may beaccomplished with an unrelated Unique ID that confirms the identity ofthe user, and may be created and stored on the device. Becausegovernments are arbiters of trust in markets (their actions in thecollective affect trust and confidence in products and markets), thesedevices are able to alert consumers to potential risk for a givenproduct or service (represented by some ruling or law that is importantto convey to the consumer, such as with alcohol, medications, ortobacco). These devices could, at the discretion of the user, indicaterelated warnings for which the government has an interest in safety. Inone embodiment, by checking an actual cigarette carton, or drugpackaging, with the enabled device, counterfeit packaging may also bedetected. In one embodiment of the present invention, bar code scannersmay be “required” to also check for embedded or associated signalsindicating authenticity. The devices may also check if supposedly “real”prescription drugs are authentic. Such a check may occur when using thedevice to communicate with a vendor and check to see if any complaintsor problems exist in stored records; again the packaging may be checkedfor authenticity in cases where counterfeits are high and difficult tocheck without some form of secure watermarking or perception-basedauthentication that can be efficiently handled by an enabled device.

According to one embodiment of the present invention, digital contentmay be distributed through a local content sever, or LCS. In general,the LCS environment is a logical area inside Which a set of rulesgoverning content use may be strictly enforced. The exact rules may varybetween implementations, but in general, unrestricted access to thecontent inside the LCS environment is disallowed. The LCS environmenthas a set of paths, or paths that allow content to enter the domainunder different circumstances. The LCS environment also has paths thatallow the content to exit the domain.

The act of entering the LCS environment may include a verification ofthe content (an authentication check). Depending upon the source of thecontent, such verification may be easy or hard. Invalidatable contentmay be subjected to a quality degradation. This degradation may be tothe content itself, or it may be removal of value-added components.Content that can be validated, but that belongs to a different LCSenvironment may be excluded. The primary purpose of the validation is toprevent unauthorized, high-quality, sharing of content betweenenvironments.

When content leaves the LCS environment, it may be watermarked asbelonging to that environment. It is allowed to leave the LCSenvironment at the quality level at which it was stored (i.e., thequality level determined by the path). The watermark on the exitingcontent may be both an embedded digital watermark and an attached hashor digital signature (it may also include a secure time stamp). Contentcannot return into the environment unless both the watermark and hashcan be verified as belonging to this environment. The presence of one orthe other is generally sufficient to allow re-entry.

This system may allow a certifiable level of security for high-qualitycontent, and may allow the use of unsecure content at a degraded qualitylevel. The security measures are such that a removal of the watermarkconstitutes only a partial failure of the system. The “wiped” contentmay be allowed back into the LCS environment, but only at a degradedquality level, a result of the watermark destruction and subsequentobscurity to the system. Consumers will not be affected to the extentthat the unauthorized content has only been degraded, but access has notbeen denied to the content. Only a complete forgery of acryptographically-secure watermark will constitute a complete failure ofthe system. For a discussion on such implementations please see U.S.Pat. No. 5,613,004; U.S. Pat. No. 5,687,236; U.S. Pat. No. 5,745,569;U.S. Pat. No. 5,822,432; U.S. Pat. No. 5,889,868; U.S. Pat. No.5,905,800, U.S. Pat. No. 6,078,664, U.S. patent application Ser. No.09/046,627 U.S. patent application Ser. No. 09/053,628, and U.S. patentapplication Ser. No. 09/594,719.

Provable security protocols may minimize this risk. Thus, the embeddingsystem that embeds the watermark does not need to be optimized forrobustness, only for imperceptibility (important to publishers andconsumers alike) and security (more important to publishers andcommercial interests in the content than to consumers). Ideally, aspreviously disclosed, security preferably does not obscure the content,nor prevent market participants from accessing information containedtherein, and for the longer term, developing trust or creatingrelationships.

The system can flexibly support “robust” watermarks as a method forscreening content to speed processing. Final validation, however, isrelied upon the fragile, secure watermark and its hash or digitalsignature (a secure time stamp may also be incorporated).

The LCS provides storage for content, authentication of content,enforcement of export rules, and watermarking and hashing of exportedcontent. Stored content may be on an accessible rewritable medium, butis preferably stored as ciphertext (encrypted or scrambled), not plaintext, to prevent system-level extraction of the content. This is incontrast to known systems, which affix or otherwise attach meta-data tothe content for access control by the variously proposed systems.

The LCS may be able to receive content from a secure electronic contentdistributor, or SECD, and may be able to authenticate content receivedvia any of the plurality of implemented paths. The LCS may monitor andenforce any rules that accompany received content, such as number ofavailable copies. Finally, unless being transmitted to a satellite unit,the LCS may watermark all exported material and supply a hash made fromthe Unique ID and the content characteristics (so as to be maintainedperceptually within the information and increase the level of securityof the watermark).

The satellite unit enables the content to be usable apart from the LCS.The satellite unit is partially within the LCS environment. A protocolmay exist for the satellite unit and LCS to authenticate any path madebetween them. This path may have various levels of confidence set by thelevel of security between the satellite unit and LCS, and determinableby a certification authority or its equivalent, such as an authorizedsite for the content. The transfer of content from the satellite unit tothe LCS without watermarking may be allowed. However, all contentleaving the satellite unit is preferably watermarked. The satellite unitwatermark may contain a hash generated from the satellite unit Unique IDand the content characteristics. If the content came from a LCS, thesatellite unit may also add the hash received from the LCS to thewatermark. The LCS and satellite unit watermarking procedures do notneed to be the same. However, the LCS is preferably able to read thesatellite unit watermarks for all different types of satellite unitswith which it can connect. The satellite unit does not need to be ableto read any LCS watermarks. Each LCS and satellite unit preferably has aseparate Unique ID.

Referring to FIG. 2, a schematic of a local content server environmentaccording to one embodiment of the present invention is provided. LCS202 may be a software device running on a general purpose computingdevice, such as a personal computer (including, in general, a centralprocessing unit, an input, an output, a memory, and a power supply). LCS202 may include local content server domain 204, rewritable media 206(such as a hard disk drive, a CD-R/W, etc), and read-only media 208(such as a CD-ROM). LCS 202 may communicate with at least one satelliteunit 210 via an interface.

In one embodiment, LCS 202 may have a Unique ID. Similarly, in oneembodiment, satellite unit 210 may have a Unique ID.

LCS 202 may communicate with SECD 212 via a network, including a localarea network, a wide area network, an intranet, and the Internet. Thiscommunication may also be established by a telephone link, a cableconnection, a satellite connection, a wireless connection, etc.

In one embodiment, a single LCS 202 may interface with more than oneSECD 212.

A plurality of paths 220, 222, 224, 226, 228, 230, 232, and 234 mayexist among LCS 202, SECD 212, Satellite unit 210, LCS domain 204,rewritable media 206, and read-only media 208. Each will be discussed ingreater detail, below.

Digital content may be securely distributed to LCS 202 from SECD viapath 220. The content may be secured during the transmission using oneor more security protocols (e.g., encryption or scrambling of thecontent). In one embodiment, if LCS 202 interfaces with multiple SECDs212, each path may use a different security protocol.

The security protocol may use an asymmetric cryptographic system. Anexample of such a system includes a public key cryptography system. Theprivate and public key pairs allow LCS 202 to authenticate and acceptthe received content.

Referring to FIG. 3, a flowchart depicting an example of anauthentication by LCS 202 is provided. In step 302, the user connects tothe SECD, makes a selection, and completes a sale.

In step 304, the LCS provides its public key to the SECD.

In step 306, the SECD uses the LCS public key to initiate transmissionsecurity.

In step 308, the SECD transmits the secured digital content to the LCS.

In step 310, the LCS receives the digital content, authenticates thatthe digital content was unchanged during transmission, and unpacks itfrom its security wrapper (that may include a secured transmission line,such as SSL). In one embodiment, the digital content may beauthenticated by a watermark and hash check. If the content can beauthenticated, the content is accepted into the LCS domain. If thecontent cannot be authenticated, it is rejected.

Referring again to FIG. 2, path 222 connects LCS domain 204 withrewritable media 206. Referring to FIG. 4, a flowchart depicting theprocess for content entering LCS domain 204 from rewritable media 206 isprovided. In step 402, the content is provided. In step 404, the contentis checked for the presence of a watermark, such as a watermark for theparticular LCS. If there is not a watermark, in step 406, the content isdegraded to Low Quality and, in step 408, the content is stored in theLCS domain.

If, in step 404, a watermark is present, in step 410, the watermark ischecked to determine if it matches the LCS. This may he achieved by ahash. If the watermark is verified, in step 408, the content is storedin the LCS. If the hash does not match, the content is rejected.

Referring again to FIG. 2, LCS domain 204 may export content to anyreceiver (other than satellite unit 210) through path 224. This mayinclude copying content to a rewritable media, creating a read-onlymedia, rendering the content for use (e.g., playing, viewing, etc), etc.

Referring to FIG. 5, a flowchart depicting the process for contentleaving LCS domain 204 is provided. In step 502, the content isretrieved from storage within the LCS. In step 504, the content isembedded with a watermark. In one embodiment, the watermark may beunique to the particular LCS, as determined by the LCS Unique ID. Thewatermark may contain a hash that is created from the combination of thecontent characteristics (such as signal features, etc.) and the UniqueID. The watermark may optionally contain other data, such as atimestamp, a number of allowable copies, etc. This would be described asparameters of use, usage data, etc. which could be referenced whencontent is exported. If the export is to a storage medium, the LCSoptionally can add a second hash to the file, external to the content,which can be used for further authentication. For security purposes, inone embodiment, the external hash may be created in a different mannerfrom the embedded, watermark hash.

In step 506, the content is output from the LCS to the receiver.

Referring again to FIG. 2, path 226 connects LCS domain 204 withread-only media 208. Referring to FIG. 6, a flowchart depicting theprocess for content entering LCS domain 204 from read-only media 208 isprovided. In step 602, the content is provided. In step 604, the contentis checked for the presence of a watermark, such as a watermark for theparticular LCS. If there is no watermark, a check is made in step 610 tosee if the originality of the content can be determined. An example ofsuch includes a media-based identifier that identities the content asoriginal.

If the content can be verified as an original, in step 608, it is storedas High Quality in the LCS domain. If the originality cannot beverified, in step 610, the quality is degraded to Stand-Quality, and, instep 608, the content is stored in the LCS domain.

If a watermark is identified in step 604, in step 612, the hash ischecked to verify that the content matches this LCS. If it matches, instep 608, the content is stored in LCS domain at High Quality. If itdoes not match, in step 614, the content is rejected.

Referring again to FIG. 2, path 228 connects LCS 202 with satellite unit210. Referring to FIG. 7, a flowchart depicting the process for contententering LCS 202 from satellite unit 210 is provided. In step 702, thecontent may he watermarked before it is transmitted to the LCS. In step704, the content is transmitted to the LCS.

In step 706, the content is checked by the LCS. This may includechecking the LCS hash. If the hash matches, in step 708, the content isstored in the LCS domain as High Quality. If there is no hash, in step710, the content is degraded to Low Quality, and in step 708, thecontent is stored in the LCS domain. If the hash does not match, in step712, the content is rejected.

Referring again to FIG. 2, path 230 connects LCS 202 with satellite unit210. Referring to FIG. 8, a flowchart depicting the process forexporting data from the LCS 202 to satellite unit 210 is provided. Instep 802, the content is retrieved from storage within the LCS. In step804, the security of the path between the LCS and the satellite unit isverified. Once the security is verified, in step 806, the content isexported to the satellite unit without a watermark.

If the security of the path cannot be verified, the export processmirrors that of an export to a receiver, depicted in FIG. 5.

Referring again to FIG. 2, path 232 is a path for content, to be storedin satellite unit 210. In one embodiment, all content may he allowed tobe imported into satellite unit 210, but may he automatically degradedto Low Quality when it is stored.

Path 234 is an export path for content rendered by satellite unit 210.In one embodiment, this content may be marked with a satellite unitwatermark that contains a hash from the satellite unit Unique ID and anyhash that is associated with the content from an LCS.

It should be noted that a hash function may be converted into a digitalsignature by performing a hash and encrypting the result of the hash.The uniqueness of the hash can vary with the hash function, while thedigital signature adds a layer of confidence to the integrity of thedata.

Other types of encryption, including transfer functions, may also beused.

Referring to FIG. 9, a flowchart of a method for trusted transactionsaccording to one embodiment of the present invention is provided. Instep 902, value-added information, or its tangible equivalent, isprovided. This may be provided by a user that wishes to verify thevalue-added information.

In step 904, the perceptible data for verification may be maintained bya vendor or provider, and may be updated by a public-key secure digitalwatermark in the observable packaging (if applicable). In those caseswhere security must be high, real time, or simply faster, key generationor signature generation functions may be enabled with embodiments of thepresent invention.

In step 906, the user provides a public key based on the identify heldin the device to enable an authentication check.

In step 908, a response may be sent to the user.

Steps 906 and 908 may be repeated with further prompting for higherlevels of authentication, or for additional checks. If the remotelocation provides the confirmation, or if a certification authority isinvolved, the response may be sent via secure transmission lines (e.g.,encrypted transmission that can only be decrypted with the user's deviceand access to the user's stored private key). Alternatively, informationmay not need to be sent in a secure manner and may be checked upondelivery to the device to limit any remote communications breaches byunintended third parties,

Referring to FIG. 10, a device for trusted transactions according to oneembodiment of the present invention is provided. Device 1000 may includesteganographic cipher 1002. Steganographic cipher 1002 may be governedby at least the following elements: (1) a predetermined message; (2) apredetermined key/key pair; and (3) a predetermined carrier signal(image data, so images will be the primary data represented andciphered).

Transducer 1004 may be provided. Transducer 1004 may include a chargedcoupled device (CCD), a personal entropy capture device (e.g., a retinalscanner, a thumbprint scanner, etc.), a touch pad (e.g., a pad forreceiving a signature), an image capture device, a bar code reader, amagnetic card reader, etc. Transducer 904 receives the data in aphysical format and converts it to an analog or digital format.

In one embodiment, the data from transducer 1004 may be marked with atimestamp for time-critical input.

Analog/digital converter 1006 may be provided. A/D converter 1004 may beused to convert analog information from transducer 1004 intopredetermined digital format. In one embodiment, signatures may beconverted in one format, images that are captured in another format, andfingerprint/iris scans may be converted in another format.

A memory may be provided. The memory may include both volatile memory,and re-writable memory, such as DataSlim™.

A volatile device may be provided, such as a one time pad (private keyof card holder/user), a one time memory or floating in the volatilememory to evade capture (stega-cipher computer code). This may beprovided in a tamperproof casing.

Device 1000 may also include output 1020. Output 1020 may be anysuitable output, including a connection port, a wireless port, a radiotransmitter, etc. Before information is output from device 1000, it maybe encrypted. In one embodiment, the information may be digitallywatermarked. In another embodiment, the information may be digitallysigned. In another embodiment, the information is not encrypted, andinstead is transmitted over a secure transmission channel. Numbergenerator 1008 may be provided. Number generator may be a random numbergenerator, or it may be a pseudo-random number generator.

In addition, the device may include a controller, a power source, and aninput and an output.

Information may be converted into a humanly perceptible form(chemical/electrical/magnetic such as a humanly visible chemical testresult, as with a pregnancy tests, an EKC, an MRI or CatScan image, areall converted into “humanly perceptible form for “human” analysis) priorto authorization of a transaction/decision event.

EXAMPLES

In order to better understand the present invention, several examplesare provided. These example do not limit the present invention in anyway, and are intended to illustrate embodiments of the presentinvention.

1. Smart Telecommunications

At present, large volumes of commerce and commerce-related activitiesare preformed using telephone connections. Authentication of identity isan ongoing concern in such transactions. Present technology allows theverification of the origin of a landline phone call (POT), but offers noassurances as to the identity of the user. Furthermore, simpleidentification of the origin of the call is only useful insofar as thatphone number can be used to index a database of callers. The presentinvention allows for bi-directional verification of identity during aphone call, with the option of partial or full concealment of identity.

A consumer may wish to make a purchase on the phone. Presently, theconsumer's identity is established by the seller using personalinformation from the consumer, such as a credit card number, an address,a phone number, etc. However, all of this information may be known by animposter. A smart phone transmits identity information (perhaps embeddedas a watermark in the audio connection), in response to a query from theseller. The receiver verifies the buyer's identity with a certificationauthority. Furthermore, the consumer may also verify the authenticity ofthe sellers identity at the same time, by the same method. The consumermay choose not to respond to certain queries in real time.

The smart phone may require a level of identity disclosure before itaccepts an incoming call. For instance, telemarketers may be required toreveal the name of their company before the call is accepted by thesmart phone. Consumers may protect themselves from fraudulent sellers byrequiring such identification. Further, legitimate sellers may beassured that their customers know that they are legitimate. Thecertification authority assures the consumer and seller that they arereceiving authentic identifications.

2. Equity Programs as a Value-Added Component

Another embodiment of the present invention relates to methods and meansof payment includes a novel means for encouraging alignment of buyer andseller interests. Similar to cooperatives, membership programs (inproprietary form, co-branded with a financial institution, orimplemented as a specialty device that can handle these equitytransactions) may be enhanced to offer buyers the opportunity topurchase options in equity of the seller's company or relatedinstitution. Instead of being given cash or points, at some fixed pointin time, consumers and sellers may be provided with the opportunity topurchase equity as available on some public or private market orexchange.

These options may be built into the functionality of the actualtransaction device and may be coupled with both trusted transactions orgeneral transaction systems. Settlement of the option may be based onany known option pricing mechanism (such as the well-known Black-Scholesmodel) and predetermination of terms for settlement and conversion ofthe option. This approach incentivizes and encourages clearer alignmentof all market participants in the value and condition of the equity ofthe entity with which transactions are being handled or negotiated.Independent certification authorities, or infomediaries that are able toensure or verify a transaction or related information, may be used toensure that such equity programs can be trusted. Any relevantdisclosures concerning legal or financial restrictions are simplyadditional value-added components for consideration.

3. More Security-Body Movements for Entropy and Pharmaceutical UseControl

A related embodiment according to another embodiment of the presentinvention includes an interface for detection of body movements (eyemovements, blinks, voice pass phrases, etc.). These movements mayinclude predetermined sequences of movements that may be ciphered in amanner similar to encrypting ASCII pass phrases. This is a novelimplementation of human movement in generating symmetric or asymmetriccryptographic keys. The transducer may include any number of means ofcapturing human-based body movements in real time for instantaneousverification of an authorized user. Moreover, unlike simple biometrics,a series of body movements (similar to the act of signing in writing,but likely to be more difficult to capture for unauthorized misuse—asignature, like a fingerprint, is able to be observed and copied withoutpermission or knowledge of the signature author) is difficult to copy.

The movements or similar biological entropy (transduced from biomedical,bioengineered, biochemical or biophysical information that may be madeperceptible and encrypted or securely watermarked for later comparisonor real time verification) may be captured by a transducer of analogsignals and converted into digital binary information used forcomparison with any number of stored corresponding instructions ormessages to be decrypted. These signals may be multidimensional (2D, 3D,4D—with a time component, etc.) to increase the information space andmake discovery of hidden secrets more computationally difficult. Images,medical or human-condition based, audio signals, video, virtual reality,multimedia, etc. all provide rich media information in which to enhancethe security of any embodiment contemplated by the present invention.Combinations of multidimensional media for varying ciphering options aswell as steganographic embedding are also contemplated as a means forfurthering ensuring computational complexity to any unauthorized user.Steganographic-mapping (watermarking) or transfer functions (scramblingor “chaffing”) may be combined with encryption ciphers as a means formaking each unique implementation or tangible device—serialization orpersonalization of a method for engaging in trusted transactions, highrisk, information-intensive or sensitive decision (military use,security use, restricted government use, privacy use, or any numbersimilar commercial or noncommercial decision or transaction events).

Additional embodiments include actual control over the use or access topharmaceuticals based on medical risk, condition or personalized adviceto the user. Tangible methods for transfer of chemical, biological orphysical agents intended for medical use or individualized control basedon third party conditions (legal, medical, governmental, etc.) aregoverned by manipulation of the apparatus, device or system used tointroduce foreign agents (informational, intangible or tangible) intopatients (the intended, authorized or verified user).

Highly secure and artificial environments, such as aircraft flyingsimulations or visual financial trading information, may berepresentative of more risk to owners of actual tangible planes ortangible assets related to any financial information. Recognition of adigitized iris does not enable movement based confirmation of futuresecrets (the movements) that may be changed, destroyed or updated toensure consistent or higher degrees of security maintenance. For somebody movements, it may be possible to maintain better security than withwritten information. In other words, certain body movements may beprevented, or made difficult to perform even under rigorous demand byunauthorized agents. Blinking or other facial movements may be madeimpossible to verify the real time identity of the user. This adds alayer of security and increases the difficulty of defeating a cipher ora series of related ciphers (encryption-based orsteganographically-based, where the digitized signal hashumanly-perceptible fidelity or characteristics) depending on access orsensitivity of information. It also maybe psychologically or human-ruledriven. Certain humanly observable body movements, or detectable“telemetry-type” data (brain activity, heart beat, pulse, or any othermedically observable information) may be either unique to an individualor simply general to certain behavior. This data may be important to useas a means of preventing poor decision-making, or requiring higherdiligence before transacting or executing a given operation. At theleast, the movements are a means for predetermining and assisting thegeneration of a binary key or seeding the generation of a cryptographickey, message or signature.

Any particular instance may be successively stored in subsets of anyprimary value information or value-added components (single key or keypair associated with a single message or signature to further serializedata that may have steganographic capacity for imperceptible embeddingin the carrier signal, primary or value-added components data). Theoperation may be highly demanding, or may require human-based or drivenor initiated decisions. The instructor, or the user, may havepredetermined the conditions that indicate confidence or lack thereof atthe time of the verification or authentication of the user. This may befor security reasons, or simply risk management, as information isincreasingly processed at higher speeds and may require greater care inensuring information data integrity. As well, humanly-observable (andconvertible into binary data for deciphering) movements enable a form ofbridging analog, human trust with digital or mathematically provable,actuarially, statistically, deterministically known or predictablemeasures of risk and trust. This novel feature is an additional benefitover the prior art and ensures future human-like characteristics in“digital” (underlying, “measurable” or “estimable” data integrity,authentication and confidence), electronic (analog transducers andtransmitters), or binary transaction systems. Further security orserialization of transaction event information (human movement orobservable condition used for secret key or equivalent generation)enable additional forms of trusted transactions.

Additional security may be assured with temporal-based limits on humanbody movement or biologically observable human condition (by use of amedical or human directed transducer). Interlocking keys and messageswith blind signatures, or onion routing transmission techniques toobscure the identity of the user, are further enhancements that mayguarantee a high level of privacy to the user of the system or device.Information formats may be encrypted or have stored primary orvalue-added component information that has to arrive to the user withoutany digitally evident tampering for the user to make the best possibledecision regarding the observed information.

Unlike the prior art, embodiments of the present invention consider theperceptibility of information to bridge human trust and confidence withcryptographic or “mathematical” measures or estimates of “security,”“data integrity” or “trust.” This is novel to the art of data securityand secured transaction or transmission technologies.

4. Algorithmic Information Theory (AIT) for Additional Security

By implementing predetermined indications of mathematically provablerandomness, the ability to discover secrets and human choice, based onunprovability or incompleteness, as discussed and is well-known in theart as originating with (yodel (incompleteness theorem) and Turing(halting problem, uncomputability). Chaitin “discovered” randomness,stating essentially that randomness can be described mathematically, andthus differentiations between discrete and infinite randomness arelogically observable. Because truth is relative in a quantum mechanicalsense, degrees of credibility concern the level of trust that may beoffered in any trusted transaction system. While the primary value thatconcerns us is information, the ability to describe programming sizecomplexity (that is optimized functional data) enables self-limitingsoftware to be programmed. To the extent that trusted transactions cannever be physically perfect operations, uniqueness of information, asboth data and code, is particularly important to providing highersecurity when computational cost and bandwidth is extraordinarily cheap,

Essentially, choice over answers to questions that cannot becharacterized as “True” or “False,” such as “This statement is false,”have inherent randomness and are thus ripe for paradoxical response.More intricate paradoxes, Berry's Paradox, Turing's halting problem, aswell as Chaitin's definition of “randomness,” are sure to enablepredictable infinite and finite (discrete) randomness with which to seedand cryptographic secret or generation of a symmetric, asymmetric key ordigital signature. Human perception as a means for enabling analog trustmay be made inherently more secure by choosing responses to paradoxesthat have no computable value. That Chaitin can describe “randomness”with logically structured instructions for the halting problem, in LISPor C programming languages, including the computer programming languageof Mathematica, enabled the development of a randomness constant.

The equations of randomness may be implemented in software and offer aunique and novel means for further securing the generation ofcryptographic or steganographic seeds, secrets, keys or messages. Ofcourse, differences between any of these information elements as to themeans for securing or authenticating data would enable flexiblearchitectures combining various ciphers and methods for arriving at arule for validation, authenticity, data integrity, confidence orenabling any subsequent manipulation of the associated data (primaryvalue-added or value-added components).

5. Entertainment Media Exchange

According to one embodiment of the present invention, the device may beused for the exchange of entertainment media. This may include audio,video, multimedia, etc, in such an exchange, the perceived risk ofvalue-added information piracy is relatively high for the seller orprovider, while the perceived risk is relatively low for the purchaser.The obvious risk is that all potential “consumers” of the media accessand copy the entertainment media for free. For music or video, orsimilar entertainment good, according the present invention provides thefollowing structure may be used.

a) Fragile Watermark Structure

The fragile watermark, according to one embodiment of the presentinvention, can actually hold an entire value-added component, encoded inthe least significant bit (LSB) of each 16-bit sample. This gives a datarate of 88200 bits per second in a stereo CD file, or a capacity of 1.89M in a 3 minute song. This is an immense capacity relative to theexpected size of the value-added component (100-200K).

The fragile watermark is preferably bound to a specific copy (Unique ID)of a specific song (Unique ID), so that it cannot be transferred toother songs. This binding can be achieved through use of a hash in thefollowing sequence:

(1) A block of value-added component is encoded into a block of samples.

(2) A hash of the value-added component block and a random number seededby the owner's identity (Device or system Unique ID) is generated andencoded into the subsequent block of samples.

(3) A hash of the first two blocks of samples and a random number seededby t e owner's identity is generated and encoded into a third block ofsamples.

(4) Repeat steps 1-3 as necessary.

Each value-added component block may have the following structure:

1 { long BlockIdentifier; //A code for the type of block longBlockLength; //The length of the block .... //Block data of a lengthmatching BlockLength char Identity Hash[hashSize]; charInsertionHash[hashSize]; }

An application can read the block identifier and determine if itrecognizes the block type. If it does not recognize the block type, itcan use the BlockLength to skip this block.

Certain Block Types are required to be present if the value-addedcomponent is to be accepted. These may include and identity block and avalue-added component Hash block. The Block Data may or may not beencrypted, depending on whether the data is transfer-restricted(value-adding) or simply informative. For instance, user-addedvalue-added component data would not need to be encrypted. TheBlockIdentifier would indicate whether the block data was encrypted ornot.

b) Robust Open Watermark

This is the mark that may indicate non-legacy content. In oneembodiment, there may be two possible settings. “1” indicates non-legacycontent that must be accompanied by a authenticable value-addedcomponent for entry into the domain (e.g., EMD or Electronic MediaDistribution media content). “0”, on the other hand, indicatesnon-legacy media that was distributed in a pre-packaged form (e.g., CDs,DVDs, game software, etc.). “0” content may or may not have avalue-added component. “0” content may only be admitted from a read-onlymedium in its original file format a “0” CD may only be admitted if itis present on a Red Book CD Specification medium).

c) Robust Forensic Watermark

This watermark may not be accessible to the consumer in any way. It maybe secured by a symmetric key held only by the seller (or an asymmetrickey pair that may be desired for some embodiments). A transaction ID maybe embedded at the time of purchase with a hash matching the symmetrickey (or key pair). The watermark may then be embedded using a very lowdensity insertion mask (<10%), making it very difficult to find withoutthe symmetric key. Retrieval of this watermark is not limited byreal-time/low cost constraints. The recovery will only be attempted onpirated material. A recovery time of 2 hours on a 400 MHz PC isreasonable.

6. Additional Parameters for Value-Adding Components

Physical shipment of packaged goods or services (value-addedinformation) is anticipated as being a potential option to consumers orpurchasers as well as sellers and providers. That the value-addinginformation may be packaged or represented tangibly does not obviate theneed for trusted transactions to ensure payment and the appropriatedivision of rights and responsibilities for various goods (a DVD formusic or video), services (smart credit card or insurance card) ormarkets (trusted telephone system, government identification schemes).This type of transaction represents additional benefits over embodimentsin the existing art—on-demand trusted transactions and physicalmanufacture/delivery of goods is enabled, without risk to the overallsystem and its value-added information security. This amountsessentially to serializing or personalizing, depending on theperspective in the transaction, each and every transaction, whilebuilding trusted transactions for the benefit of the marketplace forgoods services and information.

7. Financial or Insurance Device

The present invention enables systems and supported devices that areuseful in situations Where parties need to have pre-defined limits torisk exposure, such as an insurance policy or a claim. These systems aregenerally characterized by an emphasis on transmission and datasecurity, which reduces the perceived risk of the insurer (a seller ofrisk coverage for predetermined events). To the extent that insurancetakes into account the history and existing condition of an asset, ameasure of context or structure (tangible as well as intangible) to hecovered, as well as an economically-based replacement value (though toconfuse matters, there are also issues concerning such items as aftermarket versus brand new, brand versus generic, etc.), there existdifferences with more transparent financial devices. Financial devices(essentially a “credit agreement” or credit facility based on animprecise estimate of condition but also experience or trust) rely onthe ability, perceived or actuarially observable, to repay creditextended on behalf of the device holder. Whereas financial or credithistory is transparent in many cases, private information about anindividual's history or condition are perceived to be have higherimplicit value to the user. Financial devices and insurance devicesconverge at those points where privacy or personal information areequivalent with financial or credit information. Both types of risk havediffering requirements for updating or adjustment over the course of useof a particular line of credit or insurance policy.

Cars may be embedded with telemetry sensors to determine the real timecondition of various components, such as the frame, engine, brakes, orany combination of components mutually deemed to justify suchmonitoring. Alternatively, a smart card-like device equipped with atransducer may be used to “capture” images of items that are packed (fortravel insurance purposes), insurable items in a residence (forhomeowner's insurance purposes), etc. Any image captured may be securelywatermarked by the device and then exported to an insurance provider viaa transmission line (an ATM, a wireless connection such as a mobilephone, a PC modem connection, etc.). An insurance provider may offersuch services at auto service/repair facilities, airports, etc. with amutual reduction in claims costs and adjustments costs.

Medical information may similarly be digitally stored, securelywatermarked, and time-stamped (for any perceptible data stored, such asimages or voice) for reference to an individual's health. based onvarying levels of access to stored information, which may be distributedamong different physicians or handled by a central medical informationinfomediary. The secured image may be sent to an insurance provider as asecured image (both the device and storage facility may independentlyverify the security or tamperproofing of the perceptibly representedinformation). The doctor, patient, health care provider, governmentagencies can all have varying degrees of access that can be madetransparent to the patient. This is an inherent benefit over the priorart in that the patient can see those records that are then watermarkedand securely stored.

Additionally, the present invention provides the novel feature ofenabling the same information, at the request or demand of the patient,to be sent to a personal or secure storage “space,” so that patients mayhave more accessibility and control over their own medical records andmedical conditions. In one embodiment, the information may be providedas digitized bits. In another embodiment, the data may be provided in atangible form.

The information may be stored as tangible records or intangible,bit-represented records. Doctors may use tamperproofed signals(watermarked audio, image, video, virtual reality, anyhumanly-perceptible signal) and records that are perceptible to lowerinsurance costs and potential liability. The prior art ignores themutual benefits afforded by bidirectional information exchange (that canbe tamperproofed with secure watermarking) and transparency in creatingopportunities for trusted transactions.

Additional data, such as the transaction information that may beevidenced on a credit card bill or statement, may also be automaticallyassociated with the stored image(s) for later use. In one embodiment,the user may send the same secured data to a private data storagefacility, or create personalized records, which may serve as a secondaryset of records against which other data sent to the insurance orfinancial provider may be verified or validated. According to anotherembodiment of the present invention, authorized mechanics, physicians,and pharmacists, may add to, but not access or manipulate, previouslystored data. These individuals may also be bound by rules forestablishing the history and condition of any person or physical goodthat is being underwritten or financed.

The present invention provides certification authorities the ability todetermine the authenticity of data. In cases where public-keysteganography or cryptosystems are preferred, the embodiments extend tothose implementations as well. Moreover, they enable secure transmissioncapabilities over unsecured data transmission lines.

Referring to FIG. 11, a personal information device according to oneembodiment of the present invention is provided. Personal informationdevice (PID) 1102 may be used with financial institutions, insurancecompanies, etc.

In one embodiment, PID 1102 may be smart card; that is, a device thatresembles a credit card, but includes a processor, a power supply, amemory, and an input and output device. In another embodiment, PID 1102may be a card including a magnetic strip.

PID 1102 preferably has a Unique ID. In one embodiment, the Unique ID ofPID 1102 may be a policy number, a social security number, etc.

PID 1102 may receive information from several sources. In oneembodiment, telemetry data 1104 may be input to PID 1102. Perceptibledata 1106, such as images, photos, etc. may be input to PID 1102. Instill another embodiment, associated data, such as purchase receipts,descriptions, serial numbers, registrations, etc., which may bevalue-adding components, may be input to PID 1102.

PID 1102 may provide output data 1110 to a variety of entities. In oneembodiment, output data 1110 may be provided to company 1112 and tostorage 1114. Company 1112 may include any organization the may receiveoutput data 1110, including an insurance company, a financialinstitution, etc. Storage 1114 may include any personal use for outputdata 1110, including a private data storage such as a fixed storagemedia, paper records, etc. Company 1112 and storage 1114 may receiveoutput data 1110 in different formats. In one embodiment, output data1110 is provided according to predetermined parameters for the entity.

Output data 1110 may be watermarked, or it may be time stamped, or itmay include both. Other types of encryption are provided.

In general, output data 1110 is preferably provided to the entity via asecure communication link. Transmission of output data 1110 may becontrolled by the entity company 1112 or storage 1114) or by the user.

8. Authentication Device

According to another embodiment of the present invention, anauthentication device may be provided. Referring to FIG. 12,authentication device 1202 may be a credit-card sized “smart card,”including a processor, a power supply, a memory, and an input and outputdevice. In another embodiment, authentication device 1202 may be a palmsized computing device.

A variety of input devices may be provided. In one embodiment, a barcode scanner may be used. In another embodiment, a keypad may be used.Other input devices may be used as necessary.

In one embodiment, authentication device 1202 may include a display,such as a LCD screen. Other display technologies are within thecontemplation of the present invention.

In one embodiment, authentication device 1202 may be a government-issueddevice.

Anonymous authentication 1204 may be provided. Anonymous authentication1204 may be used to authenticate a product, a medicine, a label, etc.Anonymous authentication 1204 communicates with authentication device1202 to authenticate the item in question. In one embodiment,authentication device 1202 may display relevant information, such asknown warnings, recommended dosages, etc. regarding the item inquestion.

In another embodiment, image capture device 1206 may be provided. Imagecapture device 1206 may include a digital camera, a scanner, etc. In oneembodiment, image capture device 1206 may time stamp the image as it iscaptured.

Identity exchange 1208 may be provided. Identity exchange 1208 includesa Unique ID that may be authenticated or modified by the user. In oneembodiment, in order to verify the identity of an individual, additionalindependent identify verification may be required in addition toidentity exchange 1208. This is because authentication device 1202 maybe stolen, borrowed, etc.

Certification authority 1210 may be provided. Certification authoritymay be bound by federal, state, and local laws. In addition, privaterestrictions may apply to certification authority 1210.

In one embodiment, certification authority may be further bound bygeographical (e.g., location) or age basis (e.g., date of birth, age,etc.) to verify.

Referring to FIG. 13, a method of use for an authentication device isprovided. In step 1302, a user locates information to be authenticated.This may include a variety of information. The information is thenentered into the authentication device.

In step 1304, perceptible data is marked with a public key securewatermark.

In one embodiment, this may be done in real time.

In step 1306, the user provides a public key to initiate theauthentication.

In step 1308, a response is sent from the certification authority, oradditional prompts for higher access levels are provided.

In one embodiment, transmissions between any elements may be over asecure communication link, including SSL or similar transmissionexchange.

In another embodiment of the present invention, an authentication devicemay comprise a Internet web browser. For example, the authenticationdevice may be a “plug in” for a web browser. Such a authenticationdevice may be used to verify, or authenticate, items on web pages. Forinstance, according to one embodiment of the present invention, theauthentication device may be used to verify that an Internet bank thatdisplays the FDIC logo is authorized to display this logo. In oneembodiment, real time verification will allow a user to verify such, andgovern transactions accordingly.

It will be evident to those of ordinary skill in the art that theabove-described modes and embodiments of the present invention, whilethey disclose useful aspects of the present invention and itsadvantages, are illustrative and exemplary only, and do not describe ordelimit the spirit and scope of the present invention, which are limitedonly by the claims that follow below.

1-186. (canceled)
 187. A device for transmitting information to anotherdevice and receiving information from the other device, comprising: acentral processing unit (CPU) for processing data; a power supply forpowering said device; a transmitter for transmitting data; a receiverfor receiving data; a converter consisting of one at least one of (1) atransducer for transducing physical information to an analog informationand an A/D converter for converting said analog information to digitalformat and (2) a transducer for transducing physical information todigital format; a memory for storing data in non-transitory form;wherein said memory stores, in non-transitory form, data related toidentity of a device holder; a number generator for generating numbers;a cipher; and wherein said device is designed to respond to an action ofsaid device holder of said device, by using said converter to convertphysical information of said device holder to digital information ofsaid device holder; wherein said cipher receives said digitalinformation of said device holder during a transaction, and uses thereceived digital information of the device holder to generate cipheredoutput data during said transaction; wherein said transmitter isdesigned to transmit said ciphered output data to said other deviceduring said transaction.
 188. The device according to claim 187, whereinsaid cipher is designed to use both a key and said received digitalinformation of said device holder during a sequence of communicationswith the other device during a transaction with the other device. 189.The device according to claim 187, wherein said cipher is designed touse a hash function and said received digital information of the deviceholder during said sequence of communications.
 190. The device accordingto claim 187, wherein said cipher is designed to said received digitalinformation of said device holder to establish a hierarchical set of onetime signatures for said transaction.
 191. The device according to claim190, wherein said device is designed to sequentially transmit, via saidtransmitter, one of said hierarchical set of one time signatures, insequential communications with said other device, during saidtransaction.
 192. The device according to claim 187, wherein said deviceis designed to receive via said receiver, transaction data, and todetermine if said transaction data contains a signature associated withsaid other device.
 193. The device of claim 187, wherein said device isdesigned to receive via said receiver, transaction data, and todetermine if said transaction data contains a one time signatureassociated with said other device.
 194. A method for transmittinginformation from a handheld device to another device and receivinginformation from the other device, wherein said one device comprises acentral processing unit (CPU) for processing data; a power supply forpowering said device; a transmitter for transmitting data; a receiverfor receiving data; a converter consisting of at least one of (1) atransducer for transducing physical information to an analog informationand an A/D converter for converting said analog information to digitalformat and (2) a transducer for transducing physical information todigital format; a memory for storing data in non-transitory form; acipher; and a number generator; the method comprising: said devicestoring in said memory, in non-transitory form, data related to identityof a device holder; said device responding to an action of said deviceholder of said device, by using said converter to convert physicalinformation of said device holder to digital information of said deviceholder; said cipher receiving said digital information of said deviceholder during a transaction, and said cipher using the received digitalinformation of the device holder to generate ciphered output data duringsaid transaction; said transmitter transmitting said ciphered outputdata to said other device during said transaction.
 195. The methodaccording to claim 194, further comprising said cipher using both a keyand said received digital information of said device holder during asequence of communications with the other device during a transactionwith the other device.
 196. The method according to claim 194, furthercomprising said cipher using a hash function and said received digitalinformation of the device holder during said sequence of communications.197. The method according to claim 194, further comprising said cipherusing said received digital information of said device holder toestablish a hierarchical set of one time signatures for saidtransaction.
 198. The method according to claim 195 further comprisingsaid device sequentially transmitting, via said transmitter, one of saidhierarchical set of one time signatures in sequential communicationswith said other device, during said transaction.
 199. The methodaccording to claim 194, further comprising said device receiving, viasaid receiver, transaction data, and determining if said transactiondata contains a signature associated with the other device.
 199. Themethod according to claim 194, further comprising said device receiving,via said receiver, transaction data, and determining, during saidtransaction, if said transaction data contains a one time signatureassociated with the other device.
 200. The method of claim 194 whereinsaid cipher receiving said digital information of said device holderduring a transaction, and said cipher using the received digitalinformation of the device holder to generate ciphered output data, inreal time, during said transaction.
 201. A method for authenticating aparty to a transaction, comprising: storing in a handheld device, aunique device identification (unique device ID); initially transducing,in a transducer of the handheld device, biometric data of a person;securing, in the handheld device, the transduced biometric data, using acipher in said handheld device; initially, transmitting from thehandheld device the secured biometric data, over a network;subsequently, ciphering transaction information during a transaction, inthe handheld device, using said cipher, to generate ciphered transactioninformation; then, transmitting said ciphered transaction information,over the network.
 202. The method according to claim 201, furthercomprising said handheld device using said cipher to establish ahierarchical set of one time signatures for a transaction.
 203. Themethod according to claim 202, further comprising said handheld devicetransmitting over the network at least one of said hierarchical set ofone time signatures for a transaction, during the transaction.
 204. Themethod according to claim 201, further comprising said handheld deviceusing said cipher, a key, and biometric data of a person transduced by abiometric transducer of said handheld device, during a sequence ofcommunications during a transaction between the person and anotherentity.
 205. The method of claim 201, wherein subsequently, cipheringtransaction information during a transaction, in the handheld device,using said cipher, to generate ciphered transaction informationcomprises subsequently ciphering transaction information during atransaction in real time.
 206. A handheld device for authenticating aparty to a transaction, comprising: a unique device identification(unique device ID) stored in the device; a transducer designed at leastto transduce biometric data of a person; a cipher, designed to securethe transduced biometric data; a transmitter designed to transmit thesecured biometric data, from the handheld device, over a network; thecipher also designed to cipher transaction information during atransaction, to generate ciphered transaction information; and thetransmitter designed to transmit the ciphered transaction information,over the network.
 207. The device according to claim 206, wherein saidhandheld device is designed to use the cipher to establish ahierarchical set of one time signatures for a transaction.
 208. Thedevice according to claim 207, wherein said handheld device is designedto transmit, using the transmitter, over the network, at least one ofsaid hierarchical set of one time signatures for a transaction, duringthe transaction.
 209. The method of claim 201, further comprising thehandheld device seeding the generation of a key for said cipher, usingthe transduced biometric data.